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Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): Order. The hon. Lady has made it clear that she is not giving way.

Dame Jill Knight: The allegations that I make are far too serious to commit to memory. I have chapter and verse for all of them, and none of the barracking and bad behaviour of the Opposition will shut me up.

In Ladywood, more than 100 grants have been made, totalling £7 million. My constituency has received seven in Harborne, which is just across the road from Ladywood and two in Quinton. If anyone thinks that there is no deprivation in parts of my constituency, they are wrong. There are areas of Quinton where there is serious deprivation. There have been only two grants to the areas that need help in my patch. There are more one -parent families in Quinton than in any other part of Birmingham. I hope that all those allegations will be properly investigated by the Nolan committee.

Birmingham is a great city; it is a proud and honourable city. Its citizens deserve better than this.

11.51 am

Mr. Roy Hattersley (Birmingham, Sparkbrook): The hon. Member for Birmingham, Edgbaston (Dame J.

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Knight) has raised this debate not out of concern for the people of Birmingham but out of concern for the Birmingham Conservative councillors, who were almost wiped out in the last local election.

Dame Jill Knight: Nonsense.

Mr. Hattersley: Does the hon. Lady intend to persist in behaving like this, or will she behave with the dignity appropriate to her years?

The hon. Lady has shown concern for the councillors of Birmingham, who were virtually wiped out at the last municipal election. What we have seen is a re-run, in an even sillier version, of the party political broadcast that Conservative central office--in its folly--produced before the last municipal elections. The allegations have displayed the same triviality. Indeed, there was a moment when I thought that we were going to hear yet again about the horrendous scandal of the gravedigger discovered to be in possession of a mobile telephone.

I know that the hon. Lady is not in a mood to answer questions, but it would be interesting if she could tell us two things. What percentage of the total budget--the budget which she told us raised more than £1 billion from the electors of Birmingham--do the awful misexpenditures that she has reported represent? How many decimal places are required to discover the percentage of funds about which, in her trivial way, the hon. Lady has chosen to speak today? I am sure that she will not give us the figure, so let me ask her two other questions.

First, the hon. Lady spoke in the most florid language about allegations of misappropriation of funds and related matters. Had it not been a rather feeble political exercise, the most appropriate way for her to proceed as a Member of Parliament for the city would have been to report the allegations one by one to the district auditor. How many has she reported?

Dame Jill Knight: I am waiting for Nolan. This is much too serious for anything but a totally independent top-level inquiry.

Mr. Hattersley: We shall look forward to seeing whether Nolan actually reports explicitly on the various groups within the City of Birmingham, and we shall look forward to seeing why the hon. Lady does not regard the district auditor as an independent arbiter in these matters.

There is a further series of allegations which the hon. Lady was wise enough not to raise. They appeared on the front page of the Observer, and I shall touch on them for constituency reasons. As soon as the allegations appeared--they contained not the slightest suggestion of illegality or of money being illegally used, but only the suggestion of political rather than any other impropriety--the leader of Birmingham council, on her own initiative, referred the matter to the district auditor.

An interesting comparison can be drawn with the ex-leader of Westminster city council who--as the woman described as intentionally gerrymandering and using public funds to obtain votes for the Tory party--was also involved with the district auditor. The hon. Member for Edgbaston now appears to be concentrating on her correspondence. Which council leader would she prefer to work with--the one who, as soon as there is the faintest whiff of scandal, chooses--

Mr. Peter Bottomley (Eltham): On a point of order, Mr. Deputy Speaker. There is a general conviction that

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hon. Members do not throw accusations across the House. If my hon. Friend the Member for Birmingham, Edgbaston (Dame J. Knight) is responding to a note from the Official Report , the right hon. Gentleman should withdraw his last remarks.

Mr. Deputy Speaker: The hon. Gentleman can safely leave the procedure of the Chamber in the hands of the Chair.

Mr. Hattersley: I shall wait for the hon. Lady to pass her envelope along and then ask again which council leader would she prefer to work with --the one who, of her own volition, at the faintest whiff of scandal referred the whole matter to the district auditor, or the leader of the Westminster Tory flagship borough, who is herself the subject of a district auditor's inquiry?

Dame Jill Knight: My impression is that the debate concerns Birmingham city council and nothing else.

Mr. Rooker: You have failed in your duty.

Dame Jill Knight: I never fail in my duty.

Mr. Hattersley: The hon. Lady might at least have the grace to repeat what I have just said--that the behaviour of the leader of Birmingham city council in this particular was admirable in every detail and should be applauded and supported by Members of Parliament who wish to ensure that corruption does not besmirch the city. I wish to say a few words about the allegations in the Observer newspaper some weeks ago. It suggested that nothing illegal had been done, but it was concerned with how grants for improving derelict property were being obtained. The allegation was that the council--rightly but vaguely, in my view--tried to bring some order out of the chaos which had been caused by the Tory party in two ways: first, by not allocating enough money for improvements and, secondly, by inventing a crazy system for the allocation of the grants. The council failed to do that, and there were arguments about how some people should obtain the full rights to which they were entitled under the law. It was that and no more.

There is a crisis about housing improvement grants in Birmingham, but it is a crisis which has been brought about because there is so much decrepit property and so little Government assistance in putting that decrepit property right. As the hon. Lady knows, the leader of Birmingham council invited all the Conservative councillors--and, indeed, councillors of every political persuasion--to join a delegation to the Department of the Environment to ask for more money to make housing in Birmingham not right but better.

The hon. Lady spoke with what she regards as eloquence about housing conditions in her constituency. I understand that the leader of the council is to invite all the city Members of Parliament to see the Secretary of State for the Environment to see whether more money can be obtained under the housing investment programme. Will the hon. Lady come with us to lobby the Secretary of State for the Environment for more HIP money for Birmingham?

Dame Jill Knight: I do not think that it is a particularly good idea to conduct a dialogue across the Floor of the House, as it may take time from other hon. Members who

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wish to speak. Nevertheless, I will answer the right hon. Gentleman's question. As I have repeatedly made clear today, if large amounts were not wasted on ridiculous nonsense, there would be plenty of money available to meet Birmingham's needs.

Mr. Hattersley: I shall continue to give way to the hon. Lady as often as she wishes me to. The more she says, the more she demonstrates that she is interested only in the politics, not in the city. She has not been able to tell us how much money has been wasted, or how many houses could have been improved if there had been a total saving. She has not been able to tell us how many grants would have been extended. All she has managed to do is to produce the usual smears and allegations--generally unsubstantiated, and certainly unquantified.

This has been a year of extraordinary municipal achievement for Birmingham. But for a reduction of nearly £20 million in Government grant, the citizens of Birmingham would probably pay less for their municipal services next year than they paid last year. Despite a year of stringency--forced on the council by an arbitrarily low cap, and by cuts in grants which have always been small--the city has been perhaps uniquely successful in improving its education provision. Three weeks ago, when I last spoke in the House, the Secretary of State for Education preached a sermon to local councils, saying that, even in these desperate days they should find more money for education, fund the teachers' pay increase, extend coverage in the classrooms and preserve education standards. Birmingham has done exactly that. This morning--purely by coincidence--the Joseph Chamberlain college, which stands between my constituency and that of the hon. Member for Edgbaston, wrote to me about some specific problems. The letter began by congratulating Birmingham city council on increasing the number of teachers despite the year's financial problems. This year Birmingham will have more than 500 extra teachers. It is taking precisely the action that the Government have told education authorities that they should take despite the difficulties that they are experiencing. Why, when talking about Birmingham, does the peripatetic hon. Member for Edgbaston--she is now moving gaily from seat to seat--choose to concentrate on matters attracting trivial criticism rather than on matters which merit legitimate and major congratulation?

I see that the chairman of the group which owns the Birmingham Evening Mail is with us today. The last time he was invited to join a parliamentary delegation, he failed to do so--even though his own paper had organised the event, the purpose of which was to raise the issues of press freedom and the levying of value added tax on newspapers. He was too busy to go to Downing street with the other Birmingham Members of Parliament. I hope that in one of its editorials his paper will consider the following proposition: is increasing education spending in a year of unique stringency, and increasing the number of schoolteachers by more than 500, a virtue which more than outweighs the creation of a class in which elderly ladies can be taught to dance?

I believe that the people of Birmingham will know what is important in their city's municipal government, and I think that they will realise that the council has done a good

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job this year. I am grateful to the hon. Member for Edgbaston, who--in her lack of wisdom--has enabled my hon. Friends and me to put some of the real facts on record.

11.3 am

Sir Norman Fowler (Sutton Coldfield): The defence advanced by the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) was very unconvincing, and at times entered the realms of indescribable pomposity. When he addressed the issue at all, he seemed to be saying that only a small amount of public money was at stake, that the whole issue was trivial and that we should therefore consider other factors. The House should not accept that argument.

I congratulate my hon. Friend the Member for Birmingham, Edgbaston (Dame J. Knight) on raising this issue. It should be made clear that the issue is the misuse of public funds.

Mr. Robin Corbett (Birmingham, Erdington): Alleged.

Sir Norman Fowler: The alleged misuse of public funds--I am grateful to the hon. Gentleman.

There are other occasions on which we can debate the issues of government and local government, and wider issues. This morning we are discussing a much more specific question: whether funds provided by the public--the taxpayer--have been properly used. I intend to concentrate on the events of the past few weeks, as my hon. Friend the Member for Edgbaston has provided a long list relating to a long period. I shall deal in particular with charges that have been made about the misuse of housing renewal grants, for a specific reason. The right hon. Member for Sparkbrook accused us of seeking to make party political capital. The unique feature of the cases that have been raised is that they were not raised by Tory Members of Parliament or by the so-called Tory press, and they certainly were not manufactured by Midland Independent Newspapers. I declare an interest as non-executive chairman of the group--when we last debated matters of this kind, the hon. Member for Blackburn (Mr. Straw) made something of that.

The charges relating to renewal grants were made by a Labour Member of Parliament, supported by at least some Labour councillors, and have been reported in the national press by a newspaper which supports the Labour party. They were made by Labour against Labour. Let us be clear about this: it is not a Tory conspiracy--the whistle was blown by Labour supporters.

The right hon. Member for Sparkbrook, who used to be deputy leader of the Labour party, did not dwell on an even more extraordinary fact: as a direct result of those charges, no fewer than four Labour constituency parties have been suspended. A party investigation is taking place and Labour's public relations machine has stressed at every stage how seriously it takes the affair.

Mr. David Rendel (Newbury): Will the right hon. Gentleman give way?

Sir Norman Fowler: I will not, if the hon. Gentleman does not mind.

One can imagine the outcry that would have resulted if a single Conservative association in Birmingham-- [Hon. Members:-- "What about Westminster?"] I shall deal with Westminster shortly. In this instance, four Labour

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associations have been suspended. As Opposition Members well know, they would be expressing outrage if Conservative associations were involved, and their Front Bench would already be apportioning blame. Let me tell the hon. Member for Birmingham, Erdington (Mr. Corbett), who is my next-door neighbour in the area, that I certainly do not intend to apportion blame, for reasons that I shall come to. Suffice it to say that I can think of no other recent occasion on which four associations have been suspended as a result of such charges. Let us consider the history of those charges. On 9 February, in an Adjournment debate, the hon. Member for Birmingham, Perry Barr (Mr. Rooker)--who is present in the Chamber--raised the issue of housing renewal in Birmingham. He criticised the operation of the grants, and went on to say specifically:

"Regrettably, the operation of the mandatory grant system of the renovation grants allows it to be used for the purposes of political patronage in Birmingham."--[ Official Report , 9 February 1995; Vol. 254, c. 558.]

I respect the hon. Member for Perry Barr for setting out his views in that way.

A couple of weeks later, on Sunday 26 February, the Observer took up the story. Whatever Opposition Members may feel about other papers, I do not believe that they would regard that as a Conservative supporting newspaper- - [Interruption.] Some Opposition Members appear to have a persecution complex. That paper said:

"Inquiries by The Observer have revealed that, in some key inner-city wards, half of all Treasury-funded slum housing renovation grants are being directed to Labour Party members whose votes could help ambitious politicians to secure their local power base." That report was carried under the headline:

"Labour in £2 million sleaze enquiry".

Once again, the hon. Member for Perry Barr was asked for his comments. According to the Observer , he said that there appeared to be a prima facie breach of local government corruption laws and that the matter should be referred to the police. I remind the House that those were the words of a respected Labour Member of Parliament who represents Birmingham. A few days later, The Guardian reported that the four constituency associations involved--Small Heath, Ladywood, Sparkbrook and Perry Barr--were being suspended. The inquiry by Peter Coleman, the Labour organisation director, would

"examine allegations that rival candidates for the Sparkbrook seat, to be vacated"

by the right hon. Member for Sparkbrook,

"have been soliciting support by giving advice on how to jump the council queue for housing".

I emphasis that all these allegations were made in the past few weeks. My hon. Friend the Member for Edgbaston dealt with allegations going back much further than that. I do not intend to try to apportion guilt at this stage. Those who have been accused are entitled to put the case for their defence, and I am grateful to the hon. Member for Erdington for raising that issue. I hope that when allegations are made against Conservative councils the Labour party will adopt the same attitude, although I fear that it has not always done so.

I have a constituency point to make in this regard. As the hon. Member for Perry Barr knows, I thought that he was wrong to name my constituent, Mr. John

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Woodcock, in this affair, and I welcome the fact that the hon. Gentleman has now withdrawn the charges against him.

Mr. Rooker: I welcome the way in which the right hon. Gentleman has begun to set out his arguments. The hon. Member for Edgbaston raised many issues from the past, three of which affected my constituency and all three of which I reported to the appropriate authorities some years ago.

In my speech of 9 February I was unfair to Mr. Woodcock. I apologise to him here and now. I believe that he operated as a professional person, wholly innocent of any of the alleged scams. He is involved in the sense that he is a professional agent carrying out the work, but it was wrong of me to say that he touted for business. I have met him since and he has told me that he agreed with 97 per cent. of my speech--he agrees with the idea of urban renewal carried out on an area basis and not pepper-potted.

The Observer contacted me on the Saturday before it published the two articles and read them out to me. The paper confirmed that it, too, had named Woodcock, two firms of solicitors and two agents in the articles. Having heard what was read out to me, I told the newspaper that I did not think it fair or right to include Woodcock's name and that it was not relevant. The newspaper did not include it, and I wrote to Mr. Woodcock explaining that the articles had been read to me on the Saturday, that that was when I gave out the comment about the police, and that I had said that I did not think that his name should be used.

Sir Norman Fowler: I am extremely grateful to the hon. Gentleman. He has made a fair statement, for which my constituent will also be grateful.

Only one issue is at stake in this debate: is there a case to answer in respect of the allegations that I have set out? If there is, how should it be investigated? By setting up their own inquiries the Labour party and the city council have provided their own reply. Self-evidently, they believe that there is a case to be answered and a case which needs investigation.

My fundamental point for the Secretary of State is that the public will not be satisfied with a Labour party investigation or an internal council investigation: they must know that the charges will be thoroughly, independently and fiercely investigated. There must be no cover-up and no smokescreen--

Mr. Hattersley rose --

Sir Norman Fowler: I am just finishing.

That is why I want an assurance from the Secretary of State today that when the district auditor investigates this case--as he surely will, because it has been referred to him--he will be given all the necessary powers and resources to conduct a thorough and independent investigation of what are, after all, very serious allegations involving the misuse of public money.

Above all, the investigation must be carried out speedily. That is the message that should go out--dare I say it--from both sides of the House. We must get to the bottom of this affair at the earliest opportunity. Until we do, I am not prepared to talk about guilt. I only hope that when the

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Conservative party is the subject of similar allegations the Labour party will adopt the same policy. A year or two from now the right hon. Member for Sparkbrook will no longer be with us, but nothing that I have heard him say in recent years leads me to the conclusion that he would ever support such a policy himself.

12.17 pm

Mr. Roger Godsiff (Birmingham, Small Heath): I am grateful to the right hon. Member for Sutton Coldfield (Sir N. Fowler) for dealing at some length with the article in The Observer of 26 February. I am also grateful to my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) for raising the issue.

Before I respond to the fabrications in that article, I should like to make one further point. The right hon. Member for Sutton Coldfield called for an independent inquiry. Two days after the article about Labour being involved in a £2 million sleaze inquiry appeared, I referred the whole matter to the chief constable. I also took the trouble to write to the Home Secretary, in the following terms: "I am sure you will conclude that the allegations have some similarity to those relating to the highly publicised case involving Westminster city council, and it is obviously of the utmost importance that these matters are properly investigated. If it is found that any form of corruption has occurred, then those responsible should face the law."

The right hon. Gentleman will be pleased to know that the Home Secretary has not even bothered to reply.

However, the chief constable did reply. He said, "Thank you, Mr. Godsiff, but from a preliminary look I cannot see that there are any allegations that need to be investigated." I regret that the chief constable did not undertake an investigation, and particularly regret the fact that the Home Secretary was not prepared to use his good offices with the chief constable to encourage an investigation. I believe that the Home Secretary was not particularly interested. The article that appeared in The Observer on 26 February was written by Mr. Dean Nelson--to whom I shall return later-- using racy terminology. It began:

"Party members accused of using taxpayers' cash to `buy' safe Labour House of Commons seat."

It continued:

"Inquiries by The Observer have revealed that in some key inner city wards, half of all Treasury-funded slum housing renovation grants are being directed to Labour Party members . . . It was privately disclosed that between a third and a half of all applicants in some wards were Labour Party members."

One has to read the article a second and third time, because it is difficult to nail down the allegations. There are many references to "an informed source"--

"a senior city councillor who does not wish to be named" and "a spokesperson" but no one making the allegations is named. The article continues:

"The area of greatest concern is the Small Heath ward where more than 50 per cent of those awarded grants are party members. The majority of these applicants were presented by Roger Godsiff . . . and his local membership secretary and agent, Gulbahar Khan, one of the city council's most influential members."

When I read that on Monday, I wrote to Dr. Alan Elkin, assistant director of the city's urban renewal programme. He knows all the facts and figures-- he provides them to the politicians. I asked Dr. Elkin how many valid housing

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renovation grant applications received by the council related to properties in the Small Heath constituency. He answered quickly: one. He added that five other applications had been approved and that four more were valid. The Observer article stated that the area of greatest concern was Small Heath, where more than 50 per cent. of grants awarded had gone to Labour party members.

I pressed Dr. Elkin for further information. I asked whether one particular application had been made by the householder or by someone on his behalf, and whether any of the other nine applications had come through myself or my personal assistant, Councillor Khan. Again, Dr Elkin replied quickly:

"The owner of the property where works have been completed and grants paid made an application privately without professional assistance. However, I am not able to divulge the address without the owner's approval. The file and records have been checked and I can confirm that no applications have been submitted via yourself or Councillor Khan."

The article said that the area of greatest concern was Small Heath, where more than 50 per cent. of grants given related to Labour party members.

The Observer article further stated:

"Charles Road, Small Heath, Birmingham. This is the power base of Labour MP Roger Godsiff. It is also the home of his right-hand man, Gulbahar Khan."

That is absolutely right: it is my power base, but every hon. Member has a power base. The residents of Charles road have been extremely supportive of me, for which I am most grateful. It is one of the longest residential roads in Birmingham, containing 322 houses. Of those, 39 are occupied by members of the Labour party. I thought the figure would be much higher, and it should be. The Observer stated:

"An internal Labour Party inquiry has led to allegations that Charles Road is at the heart of the scandal."

I checked with my party's regional secretary only this week, and she confirmed that no investigation has been authorised or undertaken. More to the point, the chairman of the party's organisation committee has never authorised an investigation. One begins to see that Mr. Dean Nelson's article is based not on fact but fabrications.

I will not read the whole article to the House, but it also implied that another councillor, Raghib Ahsan, had done something improper. That councillor is no friend of mine, but he was doing what he thought was in the best interests of his electorate. He is entitled not to be smeared over the front page of The Observer , as I was.

Mr. John Butcher (Coventry, South-West): The hon. Gentleman knows that a number of people in Birmingham are concerned about queue jumping and potential abuse of section 82 procedures. Does he, from his experience of Small Heath ward, know whether section 82 has been used in a partial manner, with the result that people who have been in the queue for a long time have been leapfrogged by people who have not?

Mr. Godsiff: Section 82 relates to council housing, but the majority of Small Heath residents live in owner-occupied properties, so I cannot answer the hon. Gentleman. I am not aware of the figures for the Nechells or Aston wards.

Before reading The Observer article, I had never heard of Dean Nelson. Frankly, having read it, I do not want to hear of him again. However, this was not the first time that Mr. Nelson had written scandal articles. In 1990 and

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1991, he wrote in The Independent about matters relating to local authorities in north Wales. In another article, Mr. Nelson made allegations about a former police officer, who sued The Independent , The Observer , Harlech Television and Private Eye , and was awarded £350,000 damages. At the end of that case, and after giving the matter serious study, Mr. Justice Drake--who is not given to using flowery language--referred to Mr. Nelson's journalistic methods as "plain crookery".

Birmingham has a problem with preserving its housing stock. Many properties in the city are unfit for habitation, and the money available to deal with the stock has been cut dramatically, from £60 million 10 years ago to less than £20 million. That problem of resources should concern all hon. Members representing Birmingham constituencies. Rightly or wrongly, the council decided, not illegally, to base its grants system on queuing and inquiry forms. The forms had been completed by 9,500 people, but they have no legal standing whatever and if the system ended tomorrow those people would not have a legal leg to stand on. The queuing system is based on a cut-off date of July 1991, which is nearly four years ago. More to the point, the queuing system takes no account whatever of prioritisation. Those who applied after July 1991 and had minor problems of dampness in their properties went on the queuing list, as did those who applied after July 1991 and had no roof, dampness rising from the floor to the ceiling, every piece of wood riddled with woodworm and no hot water. As I have said, there is no prioritisation.

Some 18 months ago, I decided that I was no longer prepared to operate that system. I explained to the leader of the council that, in future when people came to see me, I would tell them the council's policy and its problems. I said that I would explain about the cut-off date and the queuing system. However, I said that, if any constituent said, "Please Mr. Godsiff, help me to get my urban renewal work carried out", I did not intend to deny that person his legal entitlement to know his rights. That is what I did, that is what I shall continue to do, and I make no apology for doing it. I am grateful to the right hon. Member for Sutton Coldfield for mentioning John Woodcock. Since I spoke to the leader of the council, I took care to ensure that anybody I passed on went to Mr. John Woodcock, a person of integrity and competence, who would deal properly with applications and would not rip people off. I took the trouble to interview him, not on my own but with another Birmingham Member, to ascertain that he was a person of integrity and competence. Everybody I have referred to him has spoken highly of the way in which he dealt with these matters.

I hold 11 advice bureau surgeries a month in my constituency and I have a full-time advice centre which is open five days a week. A huge number of people come to see me, many of them with urban renewal problems. My constituents are among the most disadvantaged in the country. I say with great respect that they are not middle-class people who know the law. They do not know the law, and they certainly do not know their entitlements. When they come to me as their Member of Parliament, they come to seek help, and many of them do not even have English as their first language.

I do not make the slightest apology in the House or anywhere else for helping my constituents to get their legal entitlements, because that is their right. I am sorry

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if, by doing that, I offend some people on the city council because it causes problems with their system. I will join those people in making representations to the Government for more resources, because that is what it is all about.

I suggested to the leader of the council that the 9,500 inquiry forms should be placed in front of the Secretary of State, and that he should be asked what to do with them. The 1989 Act is his legislation, and it is up to him to make sure that resources are available. I say again that my constituents are entitled to advice, and that I shall continue to give it when they come to see me. That advice will be given freely by me, irrespective of race, religion or colour.

12.33 pm

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