Enterprise Bill

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Miss Johnson: It is not for me to comment on voting in Committee. As the hon. Gentleman knows well, my hon. Friend the Member for Dudley, South (Mr. Pearson), who has remained silent, is the person to whom the question might be addressed outside the Committee.

In his reply to the request from my right hon. Friend the President of the Council, the Chairman of the Standards and Privileges Committee, the right hon. Member for North-West Hampshire (Sir George Young), confirmed that in the context of the Government's objective of reducing the stigma of bankruptcy, it would no longer be appropriate for a Member who becomes bankrupt to be disqualified from sitting or voting, nor would it be fair to their constituents. The Standards and Privileges Committee also felt that when a Member becomes subject to a bankruptcy restrictions order or an interim order, their seat should be vacated along the lines of the points made by my hon. Friends. By the same token, only bankrupts subject to a bankruptcy restrictions order or an interim order should be disqualified from election to the House.

As I said when discussing justices of the peace in response to earlier remarks, that picks up on the pattern and philosophy that we are advocating in other areas of the Bill, as argued for by my hon. Friends. The Government are grateful for the Committee's consideration and have accepted its advice, which is reflected in this clause and in clause 256.

Mr. Barnes: I accept very much that the provision on bankruptcy restrictions orders goes a long way to meeting the points that I have been making. If they are dealt with in the way that my hon. Friend the Member for Hemel Hempstead has suggested, the provision will go a considerable way towards meeting my concerns. I welcome the fact that the provision is a change from the previous position.

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Miss Johnson: I am grateful for my hon. Friend's remarks and for his support and clarification on how the provision connects with what he feels should be included in the Bill.

The clause disqualifies peers who are subject to a bankruptcy restrictions or interim order from sitting and voting. Initially, the proposals will apply only to those persons made bankrupt in England and Wales. That is because Scotland and Northern Ireland have their own devolved, individual, insolvency regimes. Until such times as those are amended, Members sequestrated in Scotland or made bankrupt in Northern Ireland will continue to be subject to the current arrangements. However, we have consulted colleagues in the devolved Administrations and, as with the current arrangements, the new provisions will apply in the same way to Westminster and the devolved Assemblies. For example, Members of this House, the Scottish Parliament, the Northern Ireland Assembly or the Welsh Assembly who are made bankrupt in England or Wales will be able to carry on sitting and voting unless a bankruptcy restrictions or interim order is made against them, at which point their seats will become vacant.

We also propose that Greater London Assembly Members and the Mayor of London should be treated on an equivalent basis to Members of Parliament and members of local authorities. We intend to use the order-making powers in the Bill to give effect to that intention.

We have not sufficiently considered the question raised by my hon. Friend the Member for North-East Derbyshire on whether there is a need for a further, consequential amendment to deal with the election of Members of Parliament. That is not covered in the way that it might be. I advise my hon. Friend that I will consider his particularly useful points and see whether a consequential amendment is necessary. Under proposed new section 426A, only a person subject to a bankruptcy restrictions order will be disqualified from membership of the House of Commons. It is our intention that people subject to a bankruptcy order will be able to stand for election and to sit in the House—but the standing part needs to be considered further.

Mr. Field: There are of course already some anomalies as a result of which people are entitled to stand for Parliament even if they are not entitled to take their seat and represent their constituents. Someone between the ages of 18 and 21 can stand for Parliament, but would not be able to take a seat if elected. As the Under-Secretary will recall, when Viscount Stansgate—as he briefly was—stood for the Bristol South-East by-election in 1961, he was re-elected, but his Conservative opponent was declared the winner even though he had come second in the poll.

6.15 pm

Miss Johnson: I am grateful to the hon. Gentleman for that. Obviously, we are specifically considering the context of insolvency and bankruptcy, and it is to that context that we have confined our consideration. I am sure that the Committees of the House take an active

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interest in many of those issues and there are appropriate forums for discussion of other aspects of legislation as it affects the House or other related bodies.

I agree that we cannot—indeed, should not—tell people that there will be no stigma and cannot legislate to enshrine a stigma. One important thing that we have heard in this afternoon's debate is that whatever happens on the provision concerning bankruptcy and MPs, at the end of the day the electorate will decide, as they always do, whether or not it is appropriate to support someone's candidature and make them a Member of Parliament. Nothing that we do in Committee will interfere with that. The changes that we are making reflect both what the Joint Committee felt was necessary and the new regime. It will not place undue demands on Members of Parliament, but they will not be treated differently from—to use the words of the hon. Member for Eastbourne—any other ordinary member of the public. That is right because we are here as ordinary members of the public representing ordinary members of the public.

Mr. Waterson: We have discussed the whole gamut from bad-luck bankrupts to benign bankrupts, which I hope do not become terms of art in the insolvency practitioners' world. We are a long way away from enterprise. What changing the rules for Members of Parliament has to do with encouraging enterprise and risk taking in this country completely eludes me, but I dare say that one of these days wisdom will descend on me and I will work it out.

Question put and agreed to.

Clause 254, as amended, ordered to stand part of the Bill.

Clause 255

Disqualification from office: local government

Question proposed, That the clause stand part of the Bill.

Mr. Barnes: The same principles apply to clause 255, which concerns councils. There are, however, some extra considerations that need to be taken into account. Councillors, unlike Members of Parliament, are blocked by decisions made in Parliament, which include statutes, regulations following statutes and ministerial circulars. When, for instance, they deal with planning matters, they have to be very careful about how they handle them and ensure that they are not publicly taking sides because they operate in a semi-judicial capacity. They are subject to investigation by the district auditor, and can be surcharged for supporting illegitimate expenditure by their authority. A surcharge can lead to their debarment from a council.

Earlier, I referred to Clay Cross, where Biwater was situated. As a consequence of the Local Government Act 1972, in the early 1970s, two teams of councillors in Clay Cross were removed from office because of the surcharge provisions. One was removed for refusing to raise rents according to provisions contained in the 1972 Act. It was claimed that what the team was doing

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was not illegal because a housing commission could have been sent in. In the end, however, it lost out. A number of its members went into bankruptcy in connection with the surcharge. They were excluded from being able to stand for office during the period of the bankruptcy, and were excluded for an extra five years in relation to the surcharge provision.

Fresh elections were held in Clay Cross, where 11 seats were elected for the council. Labour, which had had 11 out of 11 in the first team, now took 10 out of the 11 seats. They were in office for only a month or so and then became a parish council under local government reorganisation. The local government legislation had a knock-on effect and it was claimed that the first team had been caught by other measures.

In order to get them surcharged, the district auditor dealt with them jointly and severally. The debts were just over £2,000, the amount by which one could be surcharged under the debarment provision. Should there be joint provisions? Some members had to get out of their bankruptcies and serve another five-year period before they could seek to return to local government office. One who did that is now the highly respected leader of North East Derbyshire district council, but he went through a period when his actions made him look as though he were beyond the pale.

Are councillors sufficiently safeguarded by the bankruptcy restrictions order procedure? The clause improves their position considerably, but if they are caught up in measures that seem to be outside their control and they become benign bankrupts, will they be catered for? The Clay Cross councillors were clearly political advocates on behalf of their community. They had strong support within the community and there were massive turnouts at the second election, although the community was divided. They did not take all the seats, only 10 out of the 11.

The quotation that I gave from Sir Robert Peel related to councils. According to the report of that debate in 1835:

''Sir Robert Peel thought that if we reposed so much confidence in the electing body as to fix no qualification for a councillor, on the same principle we ought to allow of the election of a person who had been a bankrupt if the electors thought that the individual had acted with integrity.''

One could say that however they made that judgment, whether it was a matter of integrity or not, that person was the one they wanted to represent them.

In view of the rather controlled nature under which councillors already function, and even though there is an extension of the bankruptcy restrictions order that limits the people involved, I wonder whether they are safeguarded enough. What would have been the decision in the Clay Cross case? They may have been quite willing to face the debarment and the five years from the surcharge provision. Although some survived, other local political careers were virtually ruined by that development, despite the support in the community.

 

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Prepared 14 May 2002