Mr. Michael Meacher (Oldham, West) : On a point of order, Madam Speaker. Have you received a request from the Chancellor of the Duchy to make a statement on today's revelation of the Cabinet Office efficiency scrutiny report, which shows that the cost of employing consultants-- [Hon. Members :-- "Bogus."]--that the savings from employing consultants is only 2 per cent. of the cost of using them ? [Interruption.]
Several hon. Members rose
Mrs. Jane Kennedy (Liverpool, Broadgreen) : On a point of order, Madam Speaker. I have received your letter concerning the conduct of the hon. Member for Liverpool, Mossley Hill (Mr. Alton) in breach of the rules governing the use of the House of Commons emblem in writing to constituents outside his own constituency on party political matters. In the letter, the Serjeant at Arms has made it clear that an explanation has been given by the hon. Member. Would you pass on to the House that explanation in view of the fact that the hon. Member is an experienced Member of the House and has been in breach of those rules before ?
Mr. Peter Kilfoyle (Liverpool, Walton) rose
Mr. Kilfoyle rose
Madam Speaker : There can be no further point of order. I know that the hon. Lady and the hon. Gentleman represent neighbouring constituencies. The point of order applies to them both, and I shall let him have an explanation.
Mr. D. N. Campbell-Savours (Workington) : On a point of order, Madam Speaker. I think the point that is being made is that my hon. Friend the Member for Walton would like a public statement which sets out the rules exactly.
Madam Speaker : If a public statement is required to set out the rules, I shall certainly be prepared to provide one so that every hon. Member will know about the rules. If that is the case, I shall certainly see that a public statement is made as early as possible. I shall be delighted to make an announcement. It is not often that I get time to say anything.
Mr. Kilfoyle : On a point of order, Madam Speaker. In addition to the comments made by my hon. Friend the Member for Liverpool, Broadgreen (Mrs. Kennedy), is not it an affront to the House that, notwithstanding the fact that the letter which I received gave an assurance that there would not be a repetition of the distribution of the smear letter, dated 21 April, which has been going out in various constituencies in Liverpool since then, those same letters have been distributed in constituencies outside Mossley Hill ? Is not that contempt of the House ?
Madam Speaker : I shall certainly look at the matter that the hon. Gentleman raises and I shall be prepared to make a statement to the House on the general question of the use of our stationery for political matters.
Mr. Simon Burns (Chelmsford) : Further to that point of order, Madam Speaker. If I heard the hon. Member for Broadgreen correctly, she said that the problem involving the hon. Member for Mossley Hill had happened before. If that statement by the hon. Lady is correct, surely only slapping hon. Members on the hand for something and allowing them to do it again is not satisfactory.
Madam Speaker : That is why I intend to make a statement about the matter. The hon. Member for Liverpool, Broadgreen (Mrs. Kennedy) will receive the explanation that I promised to give. I have been asked if I will make a statement to the House on the principle of the use of stationery for party political purposes, and I have agreed to do so. What I have said should be absolutely clear.
Mr. Andrew F. Bennett (Denton and Reddish) : On a point of order, Madam Speaker. It is a convention of the House that, when a Minister quotes from a document, the document is placed on the Table so that other hon. Members may see whether the quotations are correct. At Question Time today the Prime Minister, in answer to one of my hon. Friends, quoted certain words. I hope that you, Madam Speaker, will ensure that the document in question is placed on the Table at the earliest opportunity.
That leave be given to bring in a Bill to make the holder of a floating charge liable for the fees of any administrative receiver appointed by him, such fees to be recoverable by the chargeholder from the assets of the debtor company, the debt ranking pari passu with unsecured creditors ; to introduce a lien system into contract law so that contractors, sub- contractors and suppliers in the construction and building industry can register a lien against an employer's interest in the land or property, ensuring that, in the case of the employer failing, such contractors, sub- contractors and suppliers are repaid before any floating charge on the development project ; and for connected purposes.
The purpose of the Bill is to correct some of the injustices that have crept into our law on insolvency and receivership. No insolvency system will ever satisfy everyone as, by definition, there is insufficient money left in an insolvent company to pay everyone. Nevertheless, a string of cases that have been brought to my attention convince me that there is a fundamental imbalance in the law and that this leaves insolvency practitioners, particularly when they are acting as administrative receivers, with no incentive to keep their fees at a reasonable level, no incentive to secure a decent price for assets that they sell and, in the ultimate insolvency case, no incentive even to expedite their work. Many hon. Members have expressed concern about the Maxwell case in which the work appears to drag on and on and most of the money seems to be going to the insolvency practitioners. I have reports on three cases in my constituency, ranging from a retail chain to a property developer, which between them have run for 17 years. Only one of them has been completed. Huge sums of money are still locked up in the other two.
The Government have, rightly, brought forward some proposals of their own. Their consultation document considers the question of how potentially viable companies can be kept going--a noble aim. I am concerned here with a quite different matter--the interests of the trade creditors and, indeed, individual creditors, who may be pensioners or even workers. I am concerned about the fact that, by appointing an administrative receiver, the holder of a floating charge--in plain English, the bank--can sweep everyone else aside and come to the top of the queue.
I propose two changes in the law. The first is to make the bank appointing insolvency practitioners working as administrative receivers liable for the fees. Thus, for the first time, the people to whom the practitioners report would have an incentive to persuade them to keep their fees down. In addition, as they would be able to recover their money only as a result of the company's becoming viable again or at the end of the queue along with the trade creditors, they would have an incentive to encourage the receivers to secure sensible prices for assets sold.
My second proposal concerns the building and construction industry, which, in many ways, is the worst insolvency area of all. Such cases often involve tens of millions of pounds. Very often construction projects are financed largely by trade creditors through the supply of goods on short-term credit. The banks often have a relatively small role, yet, through the legal devices that I have mentioned, they can secure priority. But the particular problem in the building and construction industry, unlike, for example, manufacturing, is that it is not possible to secure what is called a Ramalpa clause.
Column 108If I were a shoe manufacturer supplying a retailer, I could have a Ramalpa clause written into the contract. It would provide that the title to the goods would not pass until I had received my money. If the company were to go under, I would send a lorry round to pick up my shoes. English common law does not allow this in the case of any goods that have been united into the land--bricks that have gone into a house, cement that has gone into a structure, or tarmacadam that has gone into a road.
A company in my constituency supplied goods to a contractor working on the Thanet way in my constituency. An independent credit agency told the company that the contractor was good for at least half a million pounds' worth of credit. The contractor's bankers sent the company letters assuring it that the contracting company was fully viable and had no financial problems. In less than three months that same bank had appointed an administrative receiver. The company was given only 24 hours to pay. Of course, it could not do so within that period, although there were some who felt that it was a viable company. My constituency company, which had delivered a quarter of a million pounds' worth of goods, saw the only asset --the finished product--sold for a derisory sum. It received no payment of any sort. I propose introducing a Canadian-style lien sytem which would allow contractors and suppliers to register where they have delivered goods and services to a construction project. It would prevent a bank that appointed an administrative receiver from taking precedence on a floating charge over the suppliers receiving payment for the goods and services that they had provided. There need not be compulsion. There is no reason why developers should not be free, with the agreement freely entered into of the suppliers, to opt out. The important feature is that the option would exist, as it does with the supply of manufactured goods in other areas of business. Such a system would prevent a bank that perhaps had provided only a relatively small proportion of the total credit from pulling the rug and appointing its own administrative receiver. That receiver would then pay off the bank, fill his pockets with an enormous fee, and sell the product for a derisory sum.
The lien system was introduced in Canada, which has the same system of common law as the United Kingdom, against cries of anguish from many vested interests in the financial system. That happened four years ago. The system has been a great success ever since. I have copies of the Canadian Act that sets out the lien system, which is the second of my two proposals, if anyone would like to read them. Our insolvency system is inefficient and unfair to the trade creditor and the individual creditor. Above all, it is manifestly unreasonable that someone appointed by the banks should have so much power without any accountability in terms of whether a reasonable fee is charged, whether a reasonable price is obtained for the asset that is sold and whether the person appointed gets on with the job in an ultimate insolvency case. In many instances the insolvency practitioner wears the same hat as the administrative receiver at the final stage.
There is no magic solution to the problems that I have mentioned. I believe, however, that the two changes in the law that my Bill offers would do a great deal to right the significant imbalance in an important area of the law.
Question put and agreed to.
Column 109Bill ordered to be brought in by Mr. Julian Brazier, Sir Donald Thompson, Sir Trevor Skeet, Mr. Bob Dunn, Mrs. Edwina Currie, Mr. Andrew Hunter, Mr. Quentin Davies, Mr. David Martin, Mr. James Clappison, Mr. John Horam, Dr. Robert Spink and Mr. Jonathan Evans.
Mr. Julian Brazier accordingly presented a Bill to make the holder of a floating charge liable for the fees of any administrative receiver appointed by him, such fees to be recoverable by the chargeholder from the assets of the debtor company, the debt ranking pari passu with unsecured creditors ; to introduce a lien system into contract law so that contractor, sub-contractors and suppliers in the construction and building industry can register a lien against an employer's interest in the land or property, ensuring that, in the case of the employer failing, such contractors, sub-contractors and suppliers are repaid before any floating charge on the development project ; and for connected purposes : And the same was read the First time ; and ordered to be read a Second time upon Friday 24 June, and to be printed. [Bill 99.]
Mr. Tony Worthington (Clydebank and Milngavie) : On a point of order, Madam Speaker. A substantial part of the Bill concerns Scotland. We in Scotland have been put into the Bill, as it were, in a most haphazard way. We do not even have a Scottish Office Minister on the Government Front Bench. Is not that showing contempt for the House ?
Madam Speaker : It is not for me to determine which Ministers should be present. All Ministers have a collective responsibility for Government legislation. [Interruption.] I see that a senior Scottish Minister has now taken his place on the Front Bench.
Mr. Howard : Crime and lawlessness pose a supreme challenge to all modern democracies. As I have repeatedly made clear, the Government are determined to meet that challenge by taking action across the board to ensure that we have the most efficient and effective criminal justice system possible. That is why we have taken action to ensure that more crimes are prevented and more criminals are caught, convicted and punished.
The police service is at the centre of our strategy to meet that challenge. I believe that our police service is second to none in the world. And no Government has done more to support the police than this Government. Since we came to power, spending on the police has increased by 87 per cent. in real terms. The number of police officers has increased by more than 16,000. The number of civilians working in forces has increased by 16,000. What we now need to address is how we make sure that the huge investment that we make in our police service--amounting as it does to more than £6 billion a year--is deployed wisely and effectively.
To achieve that, we need to examine the framework within which the police operate and, where necessary, to bring it up to date so that it meets modern requirements. That framework has become out of date and needs reform. The financial arrangements for police forces and police authorities are antiquated and arcane. Too much detail must be referred to the Home Office. The arrangements for accountability are opaque. People do not know how to influence the priorities of their local forces, nor how the accountability of the police is exercised. Personnel and pay procedures are outdated. The rank structure is top heavy. Pay depends too much on length rather than quality of service. Technology and scientific advances offer enormous scope for fighting crime more effectively, but much local police information technology has been developed without co-ordination and is incompatible between forces.
Column 111The present programme of change affecting the police looks formidable, but much of it represents change which the police themselves have been actively seeking.
Mr. Barry Jones (Alyn and Deeside) : I do not yet see a Welsh Office Minister present. The Secretary of State is concentrating on matters concerning the police. I hope that he will refer to magistrates courts and the Lord Chancellor's power compulsorily to amalgamate magistrates courts committees. I warn him that the proposal in north Wales whereby Gwynedd and Clwyd are to be amalgamated may not work because of cultural and linguistic differences and the massive size of the terrain. Will he ensure that there is a rethink on that matter in north Wales ?
Mr. Howard : No Welsh Office Minister is on the Front Bench because I am responsible for policing in Wales as well as England. I assure the hon. Gentleman that, if he is patient for a little longer, he will hear what I have to say about the relevant provisions in the Bill affecting magistrates courts.
The reform programme has a number of strands. The local accountability of police forces must be strengthened and made clear to local people. The financial and managerial framework within which chief constables and forces operate must be modernised. The police service must have up-to-date personnel management and discipline procedures ; and we need a national strategy for the development of information technology for the police.
Many forces are already modernising their management arrangements on lines recommended by the Audit Commission. More responsibility for decision taking is being pushed down the line to local commanders who are best placed to judge how to deploy resources locally to best effect. Increased use is being made of civilians to free up more officers for front-line policing. But some things, such as setting the legal framework for the exercise of police powers, can be done only by the Government.
The theme of our reform programme is clear--modernisation. But we must modernise in a way that keeps the key elements of British policing. The sharing of power between the Home Secretary, the local police authority and the chief constable will continue. Policing in England and Wales by local police forces, rather than some new national or regional structure, will continue. I have no plans to introduce a programme of amalgamations. The operational independence of police constables will continue, as will the tradition of combining a police law enforcement role with wider responsibilities to help local people.
Part I of the Bill will provide the cornerstone for modernising the arrangements for police accountability, finance, management and personnel procedures. It will buttress the local basis of policing in this country through creating strong, independent local police authorities. It will give chief constables greater freedom to manage their forces to best effect. It will enable people to see and influence local policing priorities and to judge the performance of their local force. It will provide for better personnel management and discipline procedures for the police service.
Column 112need to be in operation before crime in this country--and in my constituency, where it has doubled--returns to the level it was at under the Labour Government ?
Mr. Howard : The hon. Gentleman will know that over the past 15 years crime has risen throughout the western industrialised world. I certainly hope that the various measures I am putting in place will help to make a difference.
Each police force will be maintained, as now, by a local police authority. Local police authorities will be strengthened and given clear responsibilities, which are set out in clause 4. There will be fewer financial controls from the centre. Each police authority will be required to set local policing objectives, to publish a local policing plan for its area, and to report annually on the outcome of that plan. For the first time, local people everywhere will be able to see clearly what their local police are doing with their money, and how well they are doing it.
Sir Anthony Grant (Cambridgeshire, South-West) : Will the Bill correct the disgraceful sort of activity that is going on in Cambridgeshire --and, I suspect, in other places--where Liberal or Labour-controlled county councils switch funds intended for the police to other purposes ? Will the Bill put an end to that sort of scandal ?
Mr. Howard : The Bill will give no guarantee that the irresponsibility frequently demonstrated by Opposition parties will not continue. With local policing, there will inevitably continue to be a local element, and that will entail a risk of the folly perpetrated by the Opposition parties--illustrated by the case of Cambridgeshire.
Mr. Derek Enright (Hemsworth) : Some local authorities, however, face a genuine dilemma. They are told by the Home Office that if they go to full establishment they will not be capped, but the Department of the Environment tells them a quite different story. Thus they find it difficult to judge what to do. Will the Home Secretary hold some discussions on that ?
Mr. Howard : The answer to that dilemma is that local authorities should have proper regard to their priorities. If they give the provision of an effective police force the priority that that deserves, they will find a ready answer to the dilemma that the hon. Gentleman identifies.
As the role of police authorities is changing, I believe that their composition should change too. They need to be small enough to function effectively as decision-taking bodies. They should include local people with a wide range of experience and expertise who may not have the time, or the inclination, to be councillors or magistrates. Schedule 2 sets out the procedures by which independent members of police authorities will be selected.
The Government accepted in another place that the members of each police authority should continue to choose their chairman and that, in order to stress the independence of the new members, the Home Secretary alone should not select the independent members ; but nor should they be selected by the councillor and magistrate members of the authority alone. So the procedures set out in the Bill reflect a balance between the influence of the Home Secretary and the influence of the other members of police authorities.
I reject entirely the view long held by members of the Labour party that there should be directly elected police authorities. That would be a recipe for politicising the
Column 113police service. It would also mean removing all magistrates from the work of police authorities. I believe that that would be a retrograde step.
The Bill abolishes unnecessary central controls
Mr. Worthington rose
As I was saying, the Bill abolishes unnecessary central controls on police manpower by removing the power of the Home Secretary to set establishment levels. In future, the number of constables in a force will be a matter for local decision, not for the Home Secretary. Different forces have different priorities. For some the key to greater effectiveness may be investment in technology ; for others it may be an expansion of the number of officers or civilians working on crime prevention. The best balance in resources for each force is a matter for them to settle locally with their police authority. It is not a matter for me.
I intend also to reduce central controls on capital expenditure by repealing requirements to obtain the Home Secretary's consent. There has been too much second guessing at the centre on the spending of capital resources by forces, and I want to see central provision reserved solely for major projects.
Clause 10 gives the chief constable management responsibility for civilian staff working within the force. This will encourage an integrated approach to the use of manpower and should foster a greater sense of cohesion between uniformed and civilian members of police forces.
We also propose to introduce a code of practice under clause 13 which will encourage police authorities to delegate day-to-day financial responsibilities to chief constables, as already happens in some, but by no means all, police areas. The Audit Commission and many senior police officers have called for that. These measures represent a considerable transfer of power from central Government to local police authorities and forces. They will give the police new flexibility to meet local needs.
The Bill also provides a clear framework for setting police priorities and measuring performance. Clause 13 also enables the Home Secretary to set key objectives for policing and to ensure that police authorities set performance targets for measuring the achievement of those objectives. Both the key objectives set by the Home Secretary and the local objectives set by the authority will be included in the local policing plan to which the chief constable will have regard. Police authorities and the Home Secretary have always influenced policing. The concept of a local plan--which I expect to be agreed between the chief constable and the police authority-- simply crystallises existing relationships in a way that is visible to the public.
Mr. Douglas French (Gloucester) : For the benefit of the House, will my right hon. and learned Friend clarify what he means by the words "have regard" in the context of the attention that a chief constable must pay to the guidelines set by the police committee ?
Mr. Tony Blair (Sedgefield) : This is an important point. Will the Home Secretary confirm that the performance targets set by the Secretary of State in pursuance of the objectives will be mandatory and not discretionary on the authority ?
Mr. Howard : In common with other aspects of the local plan, they will be matters to which the chief constable will have to have regard. I hope that chief constables and police forces will achieve those performance targets at which I want them to aim. As I have said, all these are matters to which the chief constable will have to have regard.
Mr. Blair : The important question asked by the hon. Member for Gloucester (Mr. French) related to the difference between having regard to them and being bound by them. Chief constables will have to have regard to the objectives, but will the Home Secretary confirm that if he directs them on the performance targets that are set in pursuance of those objectives they will be mandatory and not discretionary ?
Mr. Howard : The Secretary of State's power of direction is a different matter. Police plans and performance targets are matters to which police constables have to have regard. Of course, the Secretary of State has power to issue directions, but that raises different considerations. It is a well-known concept and I am astonished that it causes the hon. Gentleman any difficulty.
Mr. Blair : Perhaps I can explain why it causes difficulties, not just for me but for the police. Clause 13, which inserts new section 28A in the Police Act 1964, gives the Secretary of State power to determine objectives. He is also empowered, at his own discretion entirely, to issue mandatory performance targets in pursuit of the objectives. Making those performance targets mandatory means that the police authority does not merely have to have regard to them, but will be obliged to follow them irrespective of whether it wants to do so.
Mr. Howard : As I said a moment ago, the direction making power contained in clause 13 of the Bill is different from the objectives and plans to which I have previously referred. There is a power in clause 13 to enable the Secretary of State to issue directions, not to the chief constable, but to the police authority, and the police authority may then have to take those directions into account and act upon them in the way in which it sets performance targets. That is a different matter from the point raised by my hon. Friend the Member for Gloucester (Mr. French), who asked whether the key objectives contained in the plan and the plan itself were mandatory on chief constables or matters to which the chief constable would have to have regard, and the answer I gave him was correct.
Mr. Michael Shersby (Uxbridge) : Will my right hon. and learned Friend confirm that, before giving any directives, he will be obliged by the Bill to consult police authorities, for example, and those whom he considers represent the chief constables of the forces concerned ?
Mr. Howard : My hon. Friend is right to stress the importance of consultation, and the Bill requires consultation to take place. The Bill aims to make clear and to open the way in which chief constables will be held to account. Chief
Column 115constables have welcomed the parts of the Bill which give them greater management freedom. I believe that they should also welcome those proposals which enhance their accountability. The principles of greater openness and effective accountability are as important here as they are in other parts of the public sector.
Part I of the Bill also deals with police rank structure and conditions of service. Clauses 6 and 7 have the effect of abolishing two of the present nine police ranks. Clause 6 abolishes the rank of deputy chief constable. Clause 7, which was inserted in another place, would reduce the ranks between inspector and assistant chief constable from three to two.
The purpose of reducing ranks is to provide a less top-heavy management structure within police forces which would allow clearer and more direct communication, put more officers on the front line and enable the best officers to progress more swiftly through the management hierarchy.
The Government originally proposed to achieve that by abolishing three ranks. In considering the concerns which have been expressed about abolishing the ranks of chief inspector and chief superintendent, I have been encouraged by recent evidence of a change of attitude on the part of forces which are already thinning out middle management. Nearly 500 posts at inspector level or above were dropped in 1993, and the latest figures show a further reduction of more than 100 posts being achieved in the first two months of 1994 alone.
The recent decision of the Metropolitan police to cut about 450 posts in the inspecting and superintending ranks demonstrates the momentum behind the process. Other forces are also planning to thin out their management tiers.
In the light of the new evidence, I am now satisfied that it is not necessary for all three ranks to be abolished to achieve our original purpose. In assessing which rank to keep, I have been impressed by the strength of the Association of Chief Police Officers' argument that the rank of chief inspector provides the greatest management and operational flexibility. We intend, therefore, to retain the rank of chief inspector. There will be two ranks between inspector and assistant chief constable as clause 7 would require.
Sir Jim Spicer (Dorset, West) : Does my right hon. and learned Friend accept that there is a need to have someone designated as the number two to any chief constable if he should be away at any time ? Could not that be achieved perfectly easily without great expense to any force ? Without it, I am afraid that there will be a large number of other people wandering around. How does the chief constable lay hands on someone if he is not designated as the number two ?
Mr. Howard : I have always recognised that need. It would be perfectly possible to meet it by the chief constable's designation of one of his assistant chief constables as his deputy for that purpose, but it is quite unnecessary to achieve the objective that my hon. Friend identified to have a separate and specific rank of deputy chief constable.
Mr. Robert Maclennan (Caithness and Sutherland) : In the light of the trends to which the Home Secretary has drawn attention--the thinning down of the ranks by chief constables themselves--why has he felt it necessary to minimise or restrict the flexibility of the police authorities
Column 116and chief constables to take those decisions in the light of local circumstances and to impose a legislative framework ?
Mr. Howard : I do not believe for one moment that the effect of the changes that I am making is to reduce the flexibility of chief constables. On the contrary, in many ways their flexibility will be increased. But the decision that I have announced reflects many of their concerns.
Parts I and II of the Bill pave the way for revising the procedures for dealing with police officers whose behaviour or performance fails to come up to police standards. The aim is to reflect best personnel practice in the outside world while taking account of the need to protect officers from malicious or false allegations.
Concerns were expressed about the Bill as it was originally introduced and certain changes were made in another place. Those changes, as they stand, would make it impossible to introduce the new procedures. We would be left with the existing rigid discipline system which does not allow police managers to review an officer's behaviour and performance as a whole, nor to decide what action should be taken in response to a failure to meet proper police standards. That is totally unacceptable.
In particular, I shall invite the House to reverse the amendment introduced in another place which would prevent disciplinary proceedings being brought against an officer in respect of a matter for which he has been tried and acquitted in the criminal courts--the so-called, but wrongly so-called, "double jeopardy" clause. I believe that the arguments in favour of the amendment which were advanced in another place were fundamentally misconceived. I therefore intend to table an amendment to repeal subsections (1) and (2) of section 104 of the Police and Criminal Evidence Act.
Mr. Edward Garnier (Harborough) : There is a parallel between what my right hon. and learned Friend has just suggested and the law of defamation. In the law of defamation it is possible for a defendant to justify a lesser meaning or to defend as fair comment a lesser meaning than perhaps the highest sting on which a plaintiff is suing.
For example, if a police constable were to sue a newspaper which had accused him of being corrupt and guilty of a particular offence, it would still be open to the defendant newspaper to say that, none the less, although it cannot prove that high sting, the plaintiff police officer is still unfit to be a police officer by virtue of other evidence and facts that are proved in the case short of the full sting.
Is not that a parallel which is of use to the police disciplinary system ? If a police officer is aquitted of a criminal offence, there may still be findings of fact at the criminal trial which would allow the police service to draw the inference that he was unfit to remain in the police service.