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Sir Irvine Patnick (Sheffield, Hallam): My hon. Friend is knowledgeable about local government. Is it normal for a district auditor to hold a press conference before he has completed his report? Possibly the hon. Member for Morley and Leeds, South (Mr. Gunnell), a former member of the Audit Commission, is aware of previous cases in which a press conference has been held by a district auditor.

Mr. Pickles: It is a very unusual situation and, as I said, I think that it was a mistake. I am sure that the district auditor did not intend it to turn out in the way that it did and that it is a lesson for future district auditors on how they must conduct themselves.

We have heard of Westminster council's excellent record on provision and taking care of applications from the homeless.

I should like to talk a little about politics in local government, because I think that that goes to the heart of this inquiry and raises questions as to whether politics are inappropriate in local government and whether political parties should use their office to pursue popular political policies.

If one starts with the parish council, it is possible not to have political parties involved and to run them with some pragmatism. Their functions, budgets and geographical areas in which they deal are very limited. I regret those areas of the country in which politics and the politicisation of parish councils have become commonplace. But with larger councils, such as the metropolitan authorities and the county councils, some of their budgets are larger than the total budgets of many of

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the states in the United States of America. A policy of steady as she goes--or, put slightly more poetically by Alexander Pope:

    "For forms of government let fools contest;

    Whate'er is best administer'd is best"--

is simply not satisfactory.

Politics means choice in local government. We should not be ashamed of offering political choice to the electorate. Each party has its view, puts candidates up for election and it is supported or it is rejected. I should like to compare that against three popular policies.

If the previous 17 years are marked by anything, it should perhaps be by the extension of share ownership. That extension was brought about by the Conservatives to persuade more people to vote Conservative, to increase the number of share owners and to accomplish the aim of a property-owning democracy with shares. We now have more share owners in this country than we have members of trade unions. That was a blatantly political act to get votes and to increase the number of people who were Conservatives.

The right to buy goes at the very heart of the problem. It was a great touchstone between the political parties in the 1970s and the 1980s, although it is less so now. Implementing that policy was bitterly fought out. It was an attempt to persuade more people to vote Conservative than Labour. The same is true of the great debate taking place on grant-maintained schools.

We are pursuing the grant-maintained policy because we believe that it is right for schools, but we also believe that the more parents have their children educated at grant-maintained schools the more likely they are to vote Conservative. There have been some references to the Birmingham case. When the Labour group was challenged about its policy document "Meeting Needs", the district auditor said that it was lawful and that the Labour group

He went on to say:

So when is it not appropriate to have politics in local government? I think that it is inappropriate to determine whether one will help someone on the basis of how they voted. The hon. Member for Liverpool, West Derby (Mr. Wareing) spoke about that matter earlier. When people come to my advice bureau, I do not ask them how they voted. I do not look them up on our mark register to check how they voted. I certainly do not say to them, "You didn't vote for me--I'm not going to help you." In Brentwood and Ongar, I represent the whole community: Conservatives, Liberal Democrats, Labour voters and those who voted for the Green candidate.

I can recall that there was a trend in local government when Labour councillors would say that they did not represent Tories in their wards, and say "I represent my

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class on council. I represent the working class, and those who are not working class cannot come to me for help." That is an example of when politics is inappropriate.

Mr. Rendel: Will the hon. Gentleman give way?

Mr. Pickles: We are pressed for time. It is not that I do not like the hon. Gentleman, and it is nice to see him back in the Chamber, but we are pressed for time. The Labour Whip is getting a little anxious, and I am coming to my conclusion--but we can, all of us, have a chat afterwards.

I also believe that it would quite wrong to design a service just to service those areas that voted for one. That is absolutely and completely wrong. It is wrong to designate the way in which dustbins are emptied or schools allocated purely on the basis of how an area votes. That is an area in which politics is inappropriate.

We have a system of local government and not of local administration. Government means choice; politics means choice. There is a right for the electorate to make those choices. I believe that this appeal, when it goes to court, will give us an opportunity to firmly establish the right of politics in local government.

8.29 pm

Mr. Clive Betts (Sheffield, Attercliffe): I wish to refer to matters in the district auditor's report, a report that was drawn up through due process according to an Act passed by the House, introduced by this Government. We understand that the reason why the six people are appealing to the courts is that the district auditor came to a decision which is legally enforceable. The decision now stands that they misused funds, that they did it for the purpose of gerrymandering, and that in the course of doing so they ignored their responsibilities to homeless families.

However, this is not just a little local difficulty for people in Westminster or Westminster councillors or officials. It is a matter for the Government. Whether or not they choose to deal with the issues now, at some stage the Government will have to come back to the House and explain their part in this sorry process. Throughout the period of the policy on which the district auditor reported the Government knew about the policy, they were advised of it and were consulted about it. They were asked for and gave approval about certain aspects of the policy.

It is clear that, apart from the up-front issues, which we can discuss because they are on record, Westminster councillors and officials and local Members of Parliament did a great deal of lobbying behind the scenes with Ministers, their advisers and civil servants. It is on record that the right hon. Member for Westminster, North (Sir J. Wheeler) was involved in those discussions.

The basis of local authorities' housing programme strategies is the housing investment programme statement. The Government obtain information from local authorities to draw up the statement. I have been looking through the statements submitted by Westminster council for the end of the 1980s and the beginning of the 1990s. They are interesting documents. They show a change of policy following the discussions in Westminster and the decision that the council took in July 1987. They show a clear change from a policy of simply selling properties to one of social engineering. That was the purpose. Of course,

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they did not mention political gerrymandering. That gives the lie to those who say that Westminster was merely behaving in a political way. None of the issues of gerrymandering came up front. They were all in hidden, secret documents.

The public documents certainly talked about social engineering and trying to help a middle group of people within Westminster, even though at the same time the council was using its planning policies to ensure that private developments were built not for middle-income families but for rich and affluent families.

Sir Irvine Patnick: Will the hon. Gentleman give way?

Mr. Betts: I am sorry. Much as I should like to, I shall not give way to the hon. Gentleman because I am on limited time and I wish to allow my colleagues who have been sitting here throughout the debate an opportunity to speak.

As well as outlining the change of approach, the strategy statements outline the increase in the target to 500 sales per year and the general intention to sell 1,800 properties per year. They also outline the cash incentive scheme as well as the designated sales scheme. That information was all passed on to the Government. They were consulted about it. They were asked for at least tacit approval, in the sense that they made their HIP allocations on the basis of those strategy statements. Indeed, the Government gave extra allocations to Westminster and sought to justify them by pointing to Westminster's appropriate and successful policies. That is how the Government were involved throughout the process.

However, despite the sales policy, homelessness in Westminster was acute. The strategy documents reveal that more than £7 million per year was being spent on housing homeless families in temporary accommodation. Even in 1989, there were more than 700 families in temporary accommodation. That more than doubled in a five-year period once the homes-for-votes programme got under way.

There was a recognition that there was a problem of homelessness and that people had to be exported to other boroughs. Letters were written to the Secretary of State advising that Westminster could not cope under the homeless persons legislation and asking the Government to change it. Requests were made for special capital allocations to provide hostels outside the borough. The most famous such allocation was the Government's attempt to give, outside their own guidelines, more than £1 million to provide a hostel in Croydon for Westminster's homeless families. It never got off the ground because there was a political row with the then leader of Croydon council about putting the hostel in his ward.

A letter from Westminster to the Department of the Environment said:

So all the information that the Government received showed that the sales policy that Westminster was pursuing was causing it a real problem in coping with its homelessness and that it would require action from the Government to solve that difficulty.

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Despite all that information, under section 32 of the Local Government Act 1985 the Government approved the designated sales policy. They argued about the sell-on values of properties, but they gave approval. They specifically approved allowing the right-to-buy discounts that would be available to a family if they bought the house that they lived in to be passed on if the family bought one of the properties in the designated blocks. They approved that change to the normal approach.

The Government had issued guidance to the effect that where grants were given to families to buy a vacant property under any sales policy, the properties vacated by families who came from other council properties should be given to homeless families. That guidance was also broken by the Department of the Environment. It never bothered under its monitoring procedures to pull Westminster up and say that the net result of its policy was to deny homeless families homes instead of releasing vacant properties to house them.

Westminster began to operate the cash incentives policy under section 137 powers. It was advised by its own lawyers that the policy was illegal. It continued the policy under section 129 of the Housing Act 1988. Implementation of the policy required specific consent from the Government. The district auditor's report is full of a series of correspondence between Westminster and the Government between 17 July 1987, when Westminster first asked for approval, and August 1988, when it was given approval. The reason for that correspondence, and why initially the Government refused to give approval but eventually did, was that Westminster had to get round the words in the legislation.

Under the cash incentives scheme, where people were given a cash grant to move to another property, the property which they left had to be let to a homeless family. The Government colluded in getting round the words. They produced a review in 1990-91 of what happened to the cash incentives scheme. It showed that fewer than 40 per cent. of the properties vacated under the scheme went to homeless families. More than a third went neither to a homeless family nor to a council tenant in Westminster who moved over, as the Government's policy should have required.

Despite that review, the Government gave Westminster council £4.5 million of extra capital allocations in the early 1990s to follow that policy through. The policy was operated contrary to their own guidance, but the Government gave consent to Westminster to do so under powers in section 129 of the Housing Act 1988. Nothing was done, despite the fact that the Government were providing housing subsidy to implement the policy.

So the Government knew what was happening through information that they received under the housing investment programme. They gave extra capital allocations. They gave consent to the cash incentive grants. They gave consent to the grants to purchase vacant properties. They gave consent to a £1.3 million allocation for a hostel to house homeless families in another borough because Westminster complained that it would not have anywhere to put homeless families because it was selling the flats in which such families should have been housed.

At the same time, the Government, tolerant of that waste of money and the fact that homeless families were being ignored, entered into discussions to set up a Westminster housing trust, even though officers advised

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councillors that it was illegal. The purpose was to subsidise private landlords to gentrify blocks of flats and let them on to residents of Westminster or others, according to a process which would be controlled by the local Conservative party through the trust. That, too, was discussed actively with Ministers.

While all that was happening, the head of the policy unit in Westminster was a Mr. Phillips, who was on secondment from the Department of the Environment. No one could believe that he was not reporting back to his masters in the Department of the Environment about the policies that he was pursuing. Mr. Phillips eventually became the managing director and was replaced by Mr. Reiter, another appointment from the Department of the Environment, in furthering those policies.

There is no doubt that throughout all this business, the Government knew what was happening. They had the information. They were lobbied; they gave approval; they monitored what was happening by reports such as that to which I referred and they did nothing about it. No doubt they will eventually claim that they did not know everything that was being done. Despite having the evidence, they never put any concern on the record or took any action to stop the abuses that were so apparent to everyone when they were happening in Westminster.

The Secretary of State told us that it is not the right time to condemn Westminster. He will wait for the rest of the legal process to be worked through. While he is waiting, perhaps he could consider carefully the role of his Department and the Government. When it is time for the Government to apologise for what Westminster council has done, perhaps we can have an apology for their actions in this sorry and sordid mess.

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