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12 Jun 2002 : Column 314WH

Standards of Conduct (County Councillors)

1.30 pm

Gillian Merron (Lincoln): I am grateful for the opportunity to raise in Parliament a matter that is of great importance and relevance to my constituents, in view of recent events at Lincolnshire county council where the question of standards of conduct of county council members has become the focus of public debate.

In securing this Adjournment debate, I am pleased to give my hon. Friend the Under-Secretary his first opportunity to respond in his new role. In wishing him well in his new ministerial responsibilities, I hope that restoring public confidence in local democracy in Lincolnshire will be an early hallmark of a long and successful ministerial career.

As clearly stated in the public interest report into Lincolnshire county council, to which I will refer in some detail, a member of a local authority occupies a position of trust. They are individuals entrusted by Parliament and the electorate with making decisions and deploying resources contributed by others to their best effect. As a person holding such a position of public trust, a member of a local authority has an obligation to act lawfully, carefully, reasonably and with due regard to the interests of those required to fund the authority's activities. That trust imposes a duty on a member to ensure that, as far as they reasonably can, the local authority acts reasonably and complies with the law.

The vast majority of councillors comply with those expectations. They work hard for their constituents and deserve both recognition and appreciation. I also want to pay tribute to the officers and staff of Lincolnshire county council, who work diligently to serve my constituents, whose quality of life is linked closely to the services that they receive. I have long pressed the case for the public interest report into allegations of wrongdoing at Lincolnshire county council to be made public, and I am glad to say that KPMG, the council's independent auditors, agreed to make its findings public.

There has been widespread and deep concern about the disturbing nature of the published findings, and in particular the auditor's severe criticism of the unacceptable standard of conduct of the Conservative leader of Lincolnshire county council, councillor Jim Speechley. However, the open availability of the findings of an investigation of considerable public interest is only one part of the equation. Decisive action to right the wrongs of guilty councillors must also be taken and it is that for which I look on behalf of my constituents, because it is still wanting in Lincolnshire.

As the Conservative group and its leader have failed to follow the correct course, action needs to be taken. If questions exist about the conduct of county councillors, they must be made accountable to those who voted for them. The public interest report is damning, and I should like to highlight some of its main points. The auditor made it clear that

However, he remained concerned that

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It is also important to note that

The ball started rolling when Councillor Rob Parker, whose persistence is to be commended, wrote to the district auditor about his concerns that a payment had been proposed to a local company, QV Foods. In addition, the chief executive had raised his concerns about a number of other matters with the auditor, who found that

Under the heading,

he said:

He also found that other members were similarly lobbying or seeking to exert pressure with regard to personnel matters, and concluded that Councillor Speechley continues to be overly powerful in Lincolnshire county council.

Those points are illustrated by the case of former chief executive Jill Barrow, who received £160,000 of severance pay, and former director of education, Norman Riches, who received £250,000 of severance pay. Both cases arose from a misuse of severance powers. Negotiations were conducted as if the council was entitled, when making severance payments, to take into account simply what needed to be paid in order to get rid of the chief officers, and to get them to agree to quit; a particular desire driven by Councillor Speechley and the then deputy leader, Councillor Mawby, regardless of whether particular payments were lawful.

A further example of abuse of power relates to the then director of highways and planning who was instructed to appoint an individual to a particular post, or find that his own position would be in jeopardy. Interestingly, Councillor Speechley told the auditor he could not remember meetings, nor any threats to dismiss the director. Even more interesting is how such memory lapses from the leader are peppered throughout the report.

The auditor, having seen a note of the relevant meeting prepared by the then chief solicitor to the council, concluded that Jim Speechley did indeed threaten to dismiss the director, which was improper and unlawful. The auditor comments:

He goes on to say that councillors present at the meeting

A further section of the report concerns the grading of the principal officer with responsibility for the offices of the leader and chairman of the council. The auditor concluded that Councillor Speechley and the then

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deputy leader sought to interfere and improperly influenced the outcome of the principal officer's regrading claim, such that she was awarded a higher salary than she was properly due. In his conclusions on improper pressure and misuse of power, the auditor says

However, a further illegal payment has come to light of £150,000, which came in the form of a grant to QV Foods. Shortly after a site visit by Councillors Speechley, Croft and Taylor, there was a meeting between those councillors, the owner of QV Foods, the then deputy leader Councillor Mawby and the then director of highways and planning. At that meeting, the owner of QV Foods was told that the policy committee would be asked to agree to a payment of £150,000 towards the cost of a road improvement.

Warning was given by a DTI official who wrote to the council, stating that the proposed payment would be in breach of state aid rules, would be deemed unlawful and would be liable to repayment. Nevertheless, that payment went ahead. The public interest report says:

In the same vein, certain majority group councillors let officers know that they preferred certain matters not to be aired in council, committee or sub-committee.

That gives a flavour, albeit rather distasteful, of the standards of conduct of the leader and some other councillors at Lincolnshire county council. In the wake of the public interest report, a number of things have happened. First, the county council set up a standards committee. At the time, it was the only county council that decided to set up its standards committee without any representation from the opposition groups. However, I am pleased to say that, because of external pressure, including pressure from the Under-Secretary, the council reviewed its original decision to appoint a one-party standards committee and has now put that right.

An action plan in response to the public interest report has been drawn up, and credit must go to the officers and councillors who seek to be positive in such a difficult environment. The matter is not just one of individuals but the culture, the very essence of which needs to be changed.

Councillor Jim Speechley has been re-elected as leader by the Conservative group, although a recorded vote at the full council meeting showed that 11 Conservatives were not in agreement with the action. It is that that has most shocked and outraged my constituents, and rightly so. I am repeatedly asked how such a thing could happen. The crux of the question about county councillors' standards of conduct is how the leader of a council can be found guilty by the council's independent auditor of involvement in the illegal use of council taxpayers' money, of bullying and of systematic abuse of power, but still remain in post, not only as a councillor but as leader, a post that is reaffirmed by his political party.

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Political parties should put their own houses in order. We all have a responsibility to police the conduct of our elected representatives and to take action if that falls short of expectations. Not only has the Conservative group on Lincolnshire county council failed to grasp the nettle—albeit that there are many dissenting voices—so has the Leader of the Opposition. On a visit to Lincolnshire earlier this year, the right hon. Gentleman said that he would be very happy to see the results of the investigation and act upon them. However, he has had access to the public interest report, and we are now told that the matter is best dealt with locally.

Finally, to add confusion to inaction, the office of the Leader of the Opposition has advised that the party chairman, the right hon. Member for Haltemprice and Howden (David Davis), was having discussions with Councillor Speechley, but both parties say that no such thing is happening.

Unison has strongly advised its members not to attend any meetings with Councillor Jim Speechley unless accompanied. It is a sad day when a union believes that it has to do that. As leader, Councillor Jim Speechley has personally appointed the members of the executive who will run the council and has appointed each of the 19 special interest members. There has been no apology, no recognition of unacceptable conduct and no change at the top; just a wider and deeper hole of political management into which decent standards can fall.

I applaud the action that the Government have already taken to improve standards of conduct for county councillors: a code of conduct, which must be observed and signed up to; a standards board, which can oversee the implementation of the new ethical framework; and acceptance of the Nolan committee's proposals—most notably, a new criminal offence of misuse of public office, which I urge the Under-Secretary to introduce as a matter of urgency. That robust framework will help restore public confidence in local democracy and help protect and promote the role of councillors.

This is a time of tremendous change, and I am pleased that we can and will look forward to better things in Lincolnshire. However, I look to the Under-Secretary on this point; because the events outlined in the public interest report into Lincolnshire county council predate the new regulations, they do not apply. Therefore, they are of little comfort or use to my constituents, who have been taken for a ride by unscrupulous county councillors who should hang their heads in shame, and not deny, defend and reinforce their own positions.

It will take a long time for Lincolnshire county council to regain the public's trust, and it has now become clear that that will happen only with external intervention. Council tax payers, service users and staff need to be reassured that the conduct of county councillors is decent, legal and in the interests of the people of Lincolnshire. I urge the Under-Secretary to do all in his power to ensure that that happens.

1.44 pm

The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister (Mr. Christopher Leslie) : I congratulate my hon. Friend the Member for Lincoln (Gillian Merron) on securing the debate and providing the opportunity to debate standards of conduct in local government, especially county councils.

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I start by setting out strongly my belief that the vast majority of members of local authorities observe the highest standards of conduct. We are privileged to have such a large body of men and women who are willing to devote time, energy and enthusiasm to the service of their communities. All hon. Members, not just those who have served on local councils, will be aware of the commitment and the high standards displayed by council members in every part of the country.

The strength of local democracy, the delivery of effective local services and the vitality of local communities depend heavily on the commitment and the willingness to serve shown by elected members, who speak up for their communities in council debates, take tough decisions on local priorities and the allocation of large budgets and lead partnerships to tackle many of the country's most difficult social problems. We should not take that commitment for granted; we are lucky to have high standards of probity, accountability and propriety in this country.

However, we cannot disguise the fact that failings sometimes occur. There have indeed been cases, albeit rare, in which elected members have fallen short of the conduct expected of them and it is all the more serious that such misconduct has an impact that goes far beyond the damage done to the particular local authority in which it takes place. Misconduct by councillors, when it occurs, harms the community they are elected to serve and the wider reputation of local government in the rest of the country.

My hon. Friend the Member for Lincoln referred in great detail to some extremely serious matters relating to the auditor's report in Lincolnshire. I appreciate her concerns about the county council. I echo hon. Members' feelings about the need to identify and challenge poor performance in local government.

The auditor for Lincolnshire county council recently issued a public interest report in respect of the council, which identified a breakdown in corporate governance at the authority and the failure of legal and ethical safeguards. In the auditor's view, that led to unlawful payments being made to council staff and to a private company. The auditor made a number of recommendations to the council to ensure that appropriate safeguards are in place for the future.

I understand that the council accepted that it acted unlawfully in various areas. A committee of the council has recommended the setting up of a framework of measures to address the auditor's concerns, which we welcome. The auditor's role is to consider the adequacy of the council's response to his report, and to take decisions on follow-up action. Such action might include issuing a further report on the council's position.

Auditors are independent officers, appointed by the Audit Commission. The issuing of a public interest report, as in this case, is a matter for the auditor. It is then for the council to consider action in the light of the recommendations made. The Government expect all public servants, whether they are officers or elected, to uphold the highest standards of integrity in carrying out their duties.

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Although I have no remit to intervene in the auditor's role in this case, I fully recognise the concerns expressed in the debate on the need for action to be taken when poor performance by authorities has been identified. Authorities who do not uphold high standards of integrity let down the people they are supposed to represent and to serve. In the case of Lincolnshire, the auditor has put the ball firmly back in the council's court. It is now for the council to demonstrate to local people that it is prepared to take vigorous action to address the concerns identified. The auditor, and the Government, will look closely at the council's response. The council accepts that it acted illegally, which should serve as the starting point for its action.

The auditor will base his decision on the next steps to take on the willingness shown by the council to tackle the problems, and on any evidence of progress in putting an action plan in place. The Audit Commission may take into account the auditor's assessments of such authorities when it carries out its comprehensive performance assessments. The assessment process for Lincolnshire will begin in July. Information from the assessments will identify councils that are failing and provide a vehicle by which action can be monitored and shortcomings addressed. Where a council is identified as failing and there is little or no prospect of improvement, the Government will not hesitate to apply intervention measures if necessary. We are determined to tackle poor performance by authorities, and are prepared to intervene in cases where intervention is needed.

I want to highlight measures that the Government took before my appointment to improve the new ethical framework that applies to county councils and local governments. Promoting high standards of conduct in local government is an important objective for the Government. If we are to re-invigorate local democracy and enable councils to provide the local leadership that communities need to deliver the services they want, we must establish a high degree of trust in local councils.

The White Paper, "Modern Local Government—In Touch with the People", was published in July 1998. It proposed a new framework to support high standards of ethical behaviour. The new framework is an integral part of the modernisation agenda, and is no less important than the need to modernise constitutions or to provide the right mechanisms to support service delivery. It must provide a robust, efficient, fair and effective means of investigating misconduct allegations and dealing with any councillors found to have misbehaved. It must also demonstrate clearly to the public that misconduct will not be tolerated, that the highest standards are expected and that investigations will be thorough, consistent and not influenced in any way by party politics.

The Local Government Act 2000 put the framework into effect. Two of the most significant provisions of that Act are the introduction of new codes of conduct and the creation of the Standards Board for England. I will return to those provisions in a moment. In accordance with the Act and following consultation, the Government made an order in April last year that sets out 10 general principles that should underpin the conduct of members of local authorities: selflessness; honesty and integrity; objectivity; accountability;

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openness; personal judgement; respect for others; the duty to uphold the law; stewardship; and leadership. Those principles summarise what is expected from local councillors, and provide a yardstick against which their conduct can be measured.

In November last year, again following significant consultation, the Government laid before Parliament a set of model codes of conduct which draw on those principles and lay down more specific requirements. They build on earlier national codes of conduct and include some familiar provisions. They require, for example, the registration and declaration of interests. They also provide a more sensible and simple framework for handling personal interests, which should ensure that councillors can take part in more frequent discussions in which they have expertise but no prejudicial interests.

The codes have been generally welcomed, especially by counties and other larger authorities. There have been some complaints from smaller parish and town councils, especially about the registration requirements that are being introduced to parishes for the first time. I am confident that many of the concerns, especially those based on exaggerated press reporting about the detail required, will be eased as councillors grow familiar with the new codes. It is important to mention that within two months of the adoption of a new code of conduct by an authority, its members must make a written declaration that they will observe it. Failure to do so will mean that they cease to be councillors.

I understand the concerns expressed today about the need to take decisive action where the conduct of elected members does not meet the highest standards. The Government have recognised the need for more robust and effective mechanisms to allow cases of misconduct to be investigated and dealt with. We have put in place the Standards Board and other elements of the new ethical framework, which will ensure that complaints can be investigated independently and thoroughly. In the most serious cases of misconduct, the adjudication panel that has also been established will be able to disqualify members from holding office for up to five years. I am confident that the new framework will provide a sufficiently rigorous mechanism to address the general concerns that have been raised today.

From 5 May 2002, the provisions of the new codes have applied to all councillors. Any allegations that the code has been breached can be reported to the Standards Board for England, which decides whether to investigate. The board, under the chairmanship of Tony Holland, to whom I pay tribute, includes members with considerable expertise and experience of local government and of wider ethical matters. Since the creation of the board last year, a good deal of work has been undertaken to appoint ethical standards officers who will be responsible for investigating cases, and to set up systems needed to support their work. I know that the board has already received a small number of allegations and is conducting investigations; I am confident that its procedures will be efficient and rigorous.

In addition to its responsibilities for investigating misconduct allegations, the Standards Board has the wider role of promoting and maintaining high standards of conduct in local government. Last month, the board held a successful first assembly of standards committees

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in Birmingham, attended by around 1,000 members, officers and others. I have no doubt that the board will prove to be a strong force for promoting greater confidence in local democracy. It is worth noting that councils, other than parish councils, are also obliged in law to establish their own local standards committees that will take responsibility for standards issues in local authorities.

As we conclude this very welcome debate, it is worth emphasising once again that the new ethical framework was not introduced by the Government because of any systematic corruption in local government or widespread failings in the behaviour of elected councillors. The reverse is the case; we believe that the vast majority of local councillors are fundamentally honest, selfless and committed to the service of their communities. The framework is necessary because we

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need to convince others of that fact. In particular, we must demonstrate to local communities that their councillors have signed up to the highest standards of conduct and that the machinery is in place to deal with any shortcomings. The old conduct framework had too few effective means of dealing with acts of misconduct that were not necessarily criminal or likely to involve financial loss, but which were nevertheless damaging to the standing of local government.

It is regrettable that genuine cases of misconduct arise. However, the new framework with the Standards Board at its heart will be well placed to handle such cases, and to demonstrate the priority given—in local and central Government—to tackling misconduct.

Question put and agreed to.

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