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Judged by the normal principles of a local authority, this was an aberration. Not only were those people intimidated; the media were intimidated by the threat of having advertising withdrawn if they printed certain stories; councillors were threatened with the Standards Board and with prosecution. One councillor seen talking to a trade union official was threatened with the Standards Board—and she is a Conservative, a member of the ruling party on the council. But the
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staff—diligent, loyal and conscientious employees—were abused, humiliated and marginalised. As my hon. Friend said, Peter Francis was referred to as “the enemy within” by the executive director. He became seriously ill and was forced to resign.

Neighbourhood renewal funding granted by the Government was targeted at the council’s deprived areas, but it was spent on brown bins and on improving the borough’s image through the provision of sculptures and gateway signs. That is appalling. One cannot believe that money meant to relieve poverty was spent in a way totally unconnected to those objectives.

Peter’s health deteriorated, and he was finally tipped over the edge. He became ill and depressed and the stress was appalling. He had never suffered from depression before, and he had always enjoyed excellent health.

The council surrendered at the last minute, as my hon. Friend said, to avoid exposure in front of an employment tribunal. Of course, there was a gagging clause, so Peter could not even talk about the treatment that he had received. Unbeknown to Peter, David Parish, a former chief superintendent who had survived 30 years with the West Midlands police and its problems, was a broken man. He was head of community safety. He had reported major theft and the misappropriation of public funds, and investigated that over five years. Finally, a second West Midlands police inquiry was set up. I will say nothing about it except that I hope that the local authority has been assisting it fully, although I would be surprised if it has been. He is another broken man, but at least he had good legal support.

Lastly, there is Liz McDonald, who was subjected to a Kafkaesque investigation over a period of years. She was isolated physically, hounded and thrown out. She had no legal representation at all, although she had some union representation. She finally got legal representation so that she could fight her case and, as happened in the cases of Peter Francis and Dave Parish, the council capitulated, rather than have its criminal behaviour exposed. Where did the money come from to protect that vulnerable woman? It came from her housing insurance policy, which she had purchased from Direct Line. What a way for a loyal public servant to get representation; she had to use her housing policy to get legal assistance.

Finally, I point out that there are three inquiries. I will wait to see whether they are genuine inquiries, or whether the ring of steel surrounding the guilty is still in place. I hope that the Minister will discuss the issue with her colleagues, and that once those investigations are scrutinised, there will be a proper inquiry, because in the town that my hon. Friend the Member for Walsall, North, and I are proud to represent, local government has been besmirched by senior council officers. The reputation of local government depends on proper inquiries and proper action being taken by the Minister’s Department. I am absolutely sure that my hon. Friend and I will continue to fight for justice until the last day—the last hour—of our membership of the House of Commons, and beyond. That is how angry we both feel, and justice must be done. I hope that the council will provide justice for its staff, but if it does not, I believe that the Government should provide that justice.

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6.18 pm

The Parliamentary Under-Secretary of State for Communities and Local Government (Angela E. Smith): First, I congratulate my hon. Friend the Member for Walsall, North (Mr. Winnick) on securing today’s debate on an issue on which he clearly feels very strongly, and I am grateful to my right hon. Friend the Member for Walsall, South (Mr. George) for his comments, too. They are two experienced, esteemed Members held in high regard by the House. Their sense of outrage and injustice is evident to all who have heard the debate. I should say that Mr. Francis’s constituency MP, my hon. Friend the Member for Birmingham, Hall Green (Steve McCabe), is present, too. Understandably, he has to be silent, but he has made it clear to me that he shares the sense of injustice about the case of Mr. Francis.

The debate concerns a dispute between an employee—Mr. Francis—and Walsall council. The relationship between a local authority and a member of its staff is fundamentally a matter for the officer’s contract of employment, and any dispute about an individual’s treatment under his contract can, as it did in Mr. Francis’s case, be taken to an employment tribunal. It then ultimately becomes a matter for the courts to decide on, so I hope that the House understands that it would be inappropriate for me to offer any comment on the right and wrongs of the case at this time.

However, I recognise that there is widespread local concern, which has been expressed both tonight in the House and in recent months about the issues highlighted by the case. Those points were made very forcefully by my hon. Friend the Member for Walsall, North and my right hon. Friend the Member for Walsall, South. As hon. Members are aware, the district auditor for Walsall council is conducting a lengthy and thorough investigation of those matters, and that is the appropriate mechanism to uncover any issues of public concern and to ensure that the council takes any remedial action that is required.

For the benefit of hon. Members, I should explain that in these cases, the district auditor works under part 3 of the code of audit practice. There are three areas in which the auditor has to make an assessment that are relevant to this case: the arrangements for managing financial and other resources; arrangements for ensuring compliance with established policies, procedures, laws and regulations; and arrangements for ensuring that the council’s affairs are managed in accordance with proper standards of conduct. That is the basis of the investigation by the district auditor in Walsall, but right hon. and hon. Members will appreciate that the scope and complexity of work required means that it is taking some time to reach a final conclusion. A draft report was published, and comments on it have been received and must be taken into account.

The district auditor has recently written to the leader of Walsall council. He explained what stage he has reached in finalising his conclusions and said that he hoped to issue his final report as quickly as possible, with the aim of doing so in June. I appreciate that my hon. Friend the Member for Walsall, North would like that report to be published before the local elections, and I shall come on to that in a moment. However, as he
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illustrated, I do not have the power to make the district auditor publish a report at any time other than when he thinks appropriate. It is for the district auditor to determine the most appropriate way to report his findings. He could produce an audit report that he would summarise in the next annual audit letter to the council, or a report in the public interest under section 8 of the Audit Commission Act 1998. A final decision has not yet been made on the appropriate way to publish.

As my hon. Friend and my right hon. Friend have said, a further inquiry linked to the case has been set up by Walsall council itself. It is designed to be complementary to the district auditor’s investigation, and to set a broader context, with more emphasis on examining systems rather than on the roles played by individuals. The council asked a former chief executive of another local authority, Douglas Bradbury, to carry out that work. I understand that, following legal advice, the council concluded that Douglas Bradbury’s report and the district auditor’s investigation would need to be released together, as they dealt with different aspects of the same story. That is why the council’s report has been delayed. I am informed that that is the council’s current intention, but I am sure that it has heard the comments made by my right hon. and hon. Friends.

Mr. Winnick: I accept entirely that my hon. Friend cannot force the council, as I mentioned, to publish Mr. Bradbury’s report, but inevitably there will be a belief that there is a cover-up before the local elections. It is to the advantage of the ruling party not to have a report that is likely to be critical. How can it not be critical, bearing in mind the fact that the council has accepted responsibility for unfair dismissal and disability discrimination, and has given compensation? Among many people in the borough—I am sure that my right hon. Friend the Member for Walsall, South (Mr. George) will agree—there is a belief that there has been a cover-up before the election, because the Tories simply do not want the truth to come out.

Angela E. Smith: My hon. Friend makes a powerful point, but he understands my position. I cannot instruct the council to produce a report. The council has received legal advice, and I could not advise it to go against that advice, but it could take note of his comments.

The council has continued to make it clear that it wants both reports to be published at the same time. It says that it is keen to learn from the outcomes of this case, and my hon. Friend will no doubt draw his own conclusions from that. It clearly needs to take any remedial action required on the publication of those reports as quickly as possible. I understand the desire for those reports to be published as soon as possible, because without such publication, there will be speculation about their contents. I do not want to speculate on those contents, but my hon. Friend and my right hon. Friend asked me to ensure that a meeting will take place, and asked whether the matter will be considered by the Minister for Local Government after publication.

Because I do not want to speculate, I cannot give my right hon. Friend the Member for Walsall, South the
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assurance that he seeks about a further investigation. However, I can give an assurance from the Dispatch Box that my hon. Friend the Minister for Local Government will meet him and my hon. Friend the Member for Walsall, North, as he has done before, to discuss those reports and listen to their concerns.

Mr. Winnick: Is my hon. Friend aware of what I stated, arising from the letter that I received from David Shaw, the assistant chief constable? There are current cases concerning the council that are being investigated, and somewhere the matter has been referred to the Crown Prosecution Service, so the matter becomes even more serious.

Angela E. Smith: I was not aware that the matter was with the police and Crown Prosecution Service, but I know that my hon. Friend understands that I could not comment even if I were aware, because the legal process must run its course. It is not a matter in which I could or should intervene.

Neighbourhood renewal funds in Walsall have been a recurrent theme in the debate in connection with the investigations. It may be helpful if I say something about that. Walsall is one of 86 local authority districts which are currently eligible to receive neighbourhood renewal fund resources. This is an unhypothecated grant introduced in 2001 and made available to local authorities with the greatest levels of deprivation in England. My right hon. Friend the Member for Walsall, South spoke of the need to spend the money on tackling deprivation, and my hon. Friend the Member for Walsall, North is right to say that the purpose of the fund is to ensure that local authorities and their partners in the most deprived local authority districts have money available to improve core services and conditions in their most deprived neighbourhoods.

The neighbourhood renewal fund is a non-ring fenced grant. How it is spent is a decision between the local strategic partnership and its partner organisations. Local strategic partnerships are expected to use their local knowledge and spend their resources in a way that helps to meet national and local targets for reducing deprivation. The fund is flexible and locally controlled. Unlike earlier regeneration funding schemes, it does not require central Government approval for individual projects, and monitoring by Government has been focused on the outcomes of those projects, not on the details of expenditure on particular initiatives or projects.

I understand that there has been a series of internal audit reports between 2003 and 2006 to investigate the concerns raised locally about the NRF. In some cases—I repeat, some cases—those reviews were carried out jointly with external auditors and confirmed that there were significant procedural weaknesses, which have been addressed or are being addressed. As I said, I cannot comment on any possible police investigation regarding those matters.

It is worth reflecting on the use of the Government’s statutory powers of intervention, as both my right hon. and hon. Friend have asked me to address the point. Those powers enable the Secretary of State to take action if she feels that a local authority has not made sufficient arrangements to secure continuous improvement in the exercise of its functions. It is important to recognise
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that those intervention powers relate to current performance and they allow Government to take action to address issues affecting service delivery. I am grateful to my right hon. Friend the Member for Walsall, South for commending the Government on intervening in Walsall to ensure delivery.

However, the powers cannot be used in respect of past failings of a council or its officers, and Walsall council’s performance gave sufficient concern to cause it to be placed under close external scrutiny, with a Government monitoring board in operation between 2002 and 2005. As my right hon. Friend acknowledged, major reforms were carried out during that period and there have been significant improvements in the council’s performance, with Government support.

Notwithstanding those achievements, it is clear from the employment tribunal outcome that something went
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badly wrong in the handling of the case. The council must consider the lessons carefully. The issues raised by the case must be dealt with in a way that is transparent, open and honest and shows that the council has learned from experience. It is not helpful for me to speculate or make any further comment in advance of the report’s findings or the council’s independent inquiry. I reiterate the assurance from my hon. Friend the Minister for Local Government that once we have the facts before us, he will meet hon. Members to listen to their concerns and digest the content of the two reports.

Question put and agreed to.

Adjourned accordingly at twenty-nine minutes past Six o’clock.

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