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7.50 pm

Mr. John Gunnell (Morley and Leeds, South): We have just been treated to the most disgraceful speech I have ever heard in the House. I have never heard a speech which was less to the point. It concentrated entirely on vilifying the objectors. The hon. Member for Dover (Mr. Shaw) has shown why he has been labelled the vilest man in the House--a label of which I believe he is proud. He has demonstrated that fully and I am appalled that a person can use his privilege as a Member of the House in that way.

Mr. Dobson: Does my hon. Friend agree that anyone who listened to the speech of the hon. Member for Dover should bear in mind the statement of Mr. Nimmo Smith QC who inquired into the things that the hon. Gentleman said about Monklands councillors? He said:

Was not his speech tonight part and parcel of the smear campaign with which he has--

Madam Deputy Speaker: Order. That was a rather long intervention.

Mr. David Shaw: On a point of order, Madam Deputy Speaker. That point has already been made twice by the Labour party in sheer desperation. The hon. Member for Holborn and St. Pancras (Mr. Dobson) has just returned from whatever he was doing outside the Chamber to make the point a third time. He did not listen to my speech. Could you--

Madam Deputy Speaker: Order. That is not a point of order for the Chair.

Mr. Gunnell: I can see that it is a little difficult to get into this debate.

I agree with my hon. Friend the Member for Holborn and St. Pancras. As it happens, the quotation has been used before. The hon. Member for Dover spent at least the first 10 or 15 minutes of his speech dealing with Monklands council rather than Westminster council. We should concentrate on matters which affect Westminster council.

Like the Under-Secretary of State for the Environment, the hon. Member for Croydon, Central (Sir P. Beresford), I have experience of the Audit Commission. I want to comment on the charge made by the hon. Member for

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Gillingham (Mr. Couchman) that the auditor acted as investigator, prosecutor, judge and jury. I would have expected the Government to have been stronger in their defence of the Audit Commission, which they set up. In my view it has an unparalleled record. It is amazing that no Minister has spoken in favour of the procedures and that it has been suggested that the procedures were weak.

Implicit in the way in which the Audit Commission works is that auditors are asked to judge on non-audit activity. The Audit Commission was set up with specific aims, one of which was to integrate the district audit service with private sector auditing and to bring private sector auditing into local government work. It has done that. Mr. Magill now works for Deloitte Touche and has been involved in local government audit for a considerable time. He has handled matters in Westminster other than that under consideration.

When one starts to say that the Audit Commission is responsible for economy, efficiency and effectiveness in local government, one is widening the judgments that auditors are asked to make. They are asked to discuss not just the economy of services or the financial aspects but to consider and report on matters of effectiveness. On those terms, one cannot reach a judgment purely on financial probity. The way in which the Audit Commission has been set up means that auditors must act in that way.

It is regrettable that the hon. Member for Dover attacked the auditor in this case. John Magill is a senior partner with Deloitte Touche. He has been the firm's legal partner on Audit Commission work since its formation in 1983 and has been appointed auditor to several councils. He has been with the firm since 1969 and became a partner in 1975. He has been the partner in charge of the firm's professional standards function. He has demonstrated his ability in the auditing profession. He does not need the additional work that Westminster has given him over the past few years. I am sure that it makes no difference to what he or his company earns. I believe that the hon. Member for Dover's words were an unmitigated slur.

It is for the Government to say that the Audit Commission has acted properly and to stand by it. John Magill has been amazed by the amount of vilification that he has received from Conservative Members. He was described by someone involved with Westminster as

He has done nothing of the sort. He has tried to discover the truth. In discovering what he believes to be the truth and reporting on it he has clearly upset many people, some of whom are in the House.

As I have said, I expected the Government to be stronger in their support of the Audit Commission. They set it up and it operates according to the rules that they set for it.

Do we need to revise the procedures? I was present as a member of the Audit Commission when section 15 reports were laid down on Liverpool and Lambeth councils. I regretted the decisions those councils made about setting a rate, but I believed that it was right to issue a report which was in the public interest.

There was an earlier report in the public interest on Westminster and the sale of three cemeteries for 15p each. That report came from the same auditor. Those reports

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are in the public interest. My hon. Friend the Member for Walthamstow (Mr. Gerrard) made it clear that people were directly affected by the policy. Those affected have a right to a report on what happened and why. It is clear that the ratepayers of Westminster have a direct interest in the report. It is right that we should be able to debate the contents of a report that is issued in the public interest.

The Government have said consistently that they cannot comment on the report or the guilt of those concerned because it is going to appeal. The issuing of certificates to the Lambeth and Liverpool councillors took place on 6 September 1985. The Lambeth appeal was not heard in the House of Lords until 5 March 1986, and further judgments on Liverpool councillors were not made in the House of Lords until 1987. Did the Government find that they could not comment on the guilt of Liverpool and Lambeth councillors while the matters were on appeal?

In reply to a private notice question on 2 December 1985, the right hon. Member for Mole Valley (Mr. Baker) said:

He was therefore saying that they had behaved illegally. As a member of the Audit Commission, I believed that they had behaved illegally. Certainly, that was what their Lordships felt. Yet if the Government were consistent, they would not have commented on the matter. The same inconsistency was true of Lord Elton, then a Minister in the Department of the Environment, when he spoke in the House of Lords on 11 December 1985.

Mr. Robert G. Hughes (Harrow, West): Is not the essential difference that those Liverpool councillors always accepted that they were acting illegally, but believed their action to be proper from a political point of view? There was never any doubt that they were acting illegally and the then Secretary of State was therefore right to say what he did.

Mr. Gunnell: It is a question of double standards. There is no doubt that the Liverpool and Lambeth councillors suggested that, on principle, they would not set a poll tax rate because they did not think that they should, given the effect that it would have on the work forces concerned.

Several hon. Members rose--

Mr. Gunnell: Since other hon. Members want to speak and the hon. Member for Dover has taken up rather a lot of the debate, I shall not give way further. The Government were prepared to express clear condemnation in the House, although I agree that there is a difference in the nature of the charges. Is it wise to go to court on such issues as those who have been charged in Westminster by the district auditor have chosen to do? Their behaviour may not only be a local government sin but a crime against the citizens of Westminster.

On Lambeth and Liverpool councils' appeals, the Government took further action--to expedite those appeals. Will the Government take action to expedite the Westminster appeal? Since the matter has gone on for so many years, it is important that it be brought to a

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conclusion as rapidly as possible. As a member of the Audit Commission, I was told that every possible means was being used to conclude matters concerning Lambeth and Liverpool as speedily as possible. I want to be sure that the Government are acting in the same way--I trust that the commission will act in the same way, too--over Westminster city council and that they will do their level best to expedite proceedings so that we may receive the sort of answers that we want.

We should remember that Westminster city council was already very experienced in matters affecting the district auditor as a result of the cemeteries case, which found that, as such, Westminster council had not acted improperly. The auditor found that there was a regrettable handling of the sale for which members and officers were responsible, a regrettable lack of commercial awareness, and that council officers were so overawed by certain council members that they did not feel that they could say unpalatable things that council members did not want to hear. That is relevant to this Westminster case as well.

We should not judge the result of the appeal in advance, but the Government could make it very clear that they expect people who are under investigation by auditors to co-operate. The ways in which the council was deliberately unco-operative in the investigation have been obvious because they have been catalogued by the district auditor. The Government should condemn that.

The details of notes that were passed--they are certainly included in John Magill's 2,000-page report that the right hon. Member for City of London and Westminster, South (Mr. Brooke) may have read but to which others have not had access--referred clearly to actions that were thought to be illegal. Indeed, the officers who wrote of them said that they had to be made legal. I shall confine myself to only a few examples of that.

In 1987, Lady Porter made it clear that the "donkey work" for the designated sales had been done, and said:

It was said that it was her intention to gain electoral advantage by selling more properties in marginal wards.

At a strategy weekend, probably at Oxford, which was attended by officers, a paper written by Lady Porter entitled "Setting the Scene" was discussed. In that, she stated:

I agree that people take political decisions, but it is clear that people should not use council money to implement such decisions. Council money was used to empty properties and allocate grants, and rehouse people in bed-and-breakfast accommodation. I can easily imagine that there will be disputes about the actual figure, but it is indisputable that it runs into many millions of pounds. I am certainly prepared to accept that John Magill is better at arithmetic than we are in the House.

I accept the figure of £31.6 million, which is a staggering amount to be spent in the pursuance of the policy. What is illegal is that council resources were used to fund a politically driven policy to achieve electoral gain. People will say at the appeal that they were not

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responsible for the policy, but they cannot contest the fact that the policy was pursued or that the things written about it were not written. The appeal will have to consider the notes, who were the authors, who was responsible and who was implicitly involved in the policy.

I think that the matter will go to the Court of Appeal. I hope that the Government will expedite matters to help it proceed as rapidly as possible. The Government should support the district audit service and make clear that the district auditor has in no way behaved differently from how we would expect him to behave. Hon. Members should be praising him for the meticulous way in which he has examined--despite the obstructions--all the affairs and reports in detail, as the right hon. Member for City of London and Westminster, South has said. The right hon. Gentleman said that the district auditor's work was meticulous. He is the only person who has made it clear that the work has been very good. I would have hoped that the Government could assert that whoever is in political control, it is the role of the district audit service to make it clear that there is probity in local government. That was allegedly the reason why they set the Audit Commission to work--to extend the concept of financial probity to cover an examination of services in terms of value for money.

According to those terms, Mr. Magill has found that Westminster city council's policy was pursued for electoral advantage, and we must accept that that is the case. That being so, it is up to the courts to decide who was personally guilty of perpetrating that policy and foisting it upon the council.

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