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Local Government Amendment (Scotland) Bill

Volume 345: debated on Thursday 30 March 1939

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Order for Second Reading read.

7.10 p.m.

I beg to move, "That the Bill be now read a Second time."

The purpose of this Bill is to remove a position of difficulty which has arisen in the present Statutory provisions which govern the disqualification of councillors for membership of local authorities— county, burgh or district councils. Recently questions have arisen in an acute form on the right of councillors who are themselves occupying council houses to vote on housing matters, and also on the placing of contracts by local authorities with co-operative societies in which some members of the council have some interest. The present position as regards housing is regulated by Section 107 of the 1925 Act, which provides that a person shall not vote as a member of a local authority, or of any committee of a local authority, on a housing question if it relates to any house, building or land in which he is beneficially interested. Difficulties in the administration of housing business, especially in relation to the fixing of rents, have arisen in a number of burghs owing to the very high proportion of councillors who occupy council houses. I know of one case in which an entire local authority were all occupying council houses, and there are several other cases in which a large majority of them are in that position. The result is that the conduct of housing business in these areas has been seriously impeded, if not rendered impossible, in regard to such matters as the fixing of rent.

As to the position of councillors who belong to co-operative societies, the position under the present law is that a person shall be disqualified for being nominated or elected, or for being or continuing a councillor, if and while he has, directly or indirectly, by himself or his partner, any share or interest in any contract with, by or on behalf of the council. An exception exists in favour of those councillors who have a share or interest in any company incorporated by Act of Parliament or Royal Charter under the Companies Act. That exception does not cover the case of private companies or of members of co-operative societies, who are consequently disqualified altogether from membership of the council in the event of the council entering into a contract with a cooperative society of which they are members. Public attention has only recently been directed to the position of such councillors, whose statutory disqualification had not previously been appreciated, and since in several areas contracts with co-operative societies are in existence, a very large number of councillors appear to be disqualified and liable to vacate their office.

Is it quite correct to say that the attention of those responsible for administration or legislation has just been drawn to the present situation owing to what arose at Stirling and elsewhere? Is it not a fact that in 1924 a Bill was actually prepared because of then existing anomalies?

I was not aware of that. Of course I accept what the hon. Member says, but it is only recently that any trouble or difficulty appears to have arisen in connection with this matter. Otherwise, I do not see why more public attention was not called to it before.

Does the hon. Gentleman appreciate the fact that that Bill is available in the Library of the House?

I have no doubt that that may be so, but I do not think the existence of the Bill or its purpose can have been generally appreciated in Scotland, or surely more attention would have been called to the matter, and we should not now have been in the position of having to deal with it as a matter of urgency. The hon. Member may have been aware of the difficulty, but I confess that I was not, and I do not think many people serving upon local authorities in Scotland were aware of it. My information is that it is only recently that their attention has been called to it, and naturally considerable concern has been created by the discovery of a position which was not generally appreciated before. The continuance of this situation would not only be very disturbing to a large number of councillors who did not appear to have appreciated their position under the law, but it would, of course, seriously affect a number of local authority services.

As soon as these difficulties were brought to the notice of my right hon. Friend, and when he was satisfied that they were acute, he thought it right as a matter of urgency, to consult the Departmental Committee which is at present reviewing the general local government law in Scotland, the Public Health Consolidated Committee under the chairmanship of Sir John Jeffrey, which includes representatives of the local authorities in Scotland and of the three Parliamentary parties. The committee, in the course of their review, did have both these points under consideration, but my right hon. Friend invited them to give him their views on the desirability of amending the existing provisions dealing with disqualification, and upon the form which any amendments for this purpose should take, and the committee, after giving careful consideration to the position, have furnished us, in anticipation of their general report, with their views in the form of a memorandum which has been printed as a Stationery Office publication, so that it may be available to hon. Members.

It will be seen from this memorandum that the committee are unanimously agreed that certain amendments should be made in the existing law in order to meet those difficulties which I have mentioned. This Bill has been prepared on the lines recommended by this committee, and it gives effect to their considered views. The general effect of the Bill is to repeal the existing Scottish provisions under which a person interested in a contract with a local authority is disqualified from membership of that authority, and in place of this disqualification from being a member of the authority to provide that if a member of the authority has any pecuniary interest in any contract, or proposed contract, he shall disclose the fact and shall be precluded from taking part in any discussion or vote upon the matter. The Bill also provides that in any case where the effect of this provision would be to impede the transaction of any particular item of business the Secretary of State may be called upon to remove the disability which is thereby imposed by giving directions on the manner in which the business may be transacted on behalf of the council.

In substituting disqualification from voting instead of disqualification from membership the Bill proceeds upon the principle followed in Section 107 of the Scottish Housing Act, 1925, which I mentioned to begin with, and also Section 76 of the English Local Government Act, 1933. The only respects in which this Bill differs from the law which is at present in operation in England and Wales are, first, in Sub-section (3) of Clause 2, where a councillor who has within three months been in receipt of or an applicant for Poor Law relief is disqualified from taking part in the consideration of the amount of outdoor relief to be provided in the case of any other person. In England and Wales the provision is considerably stronger. A person who has within 12 months of his selection been in receipt of Poor Law relief is disqualified by statute from membership of the council. Since there is no similar existing provision for disqualification from membership or for voting in Scotland, in the circumstances the Departmental Committee took the view that they would not be justified in recommending disqualification from membership as in England, but they were unanimously of the opinion that it would be undesirable that a member actually in receipt of relief from the local authority should participate in the discussion of the cases of other applicants, and this Sub-section gives effect to that view.

The other point on which the law differs from the law in England and Wales is that under Sub-section (8) of Clause 2, the Secretary of State is empowered, where the number of members of a council disabled by the provisions of the Section is so great a proportion of the whole as to impede the transaction of business, to intervene either by removing the disability of the persons concerned or by giving directions on the manner in which the business may be transacted on behalf of the council. In England and Wales the Minister of Health can only remove the disability, but the Departmental Committee, in recommending the provision of this alternative power, had in mind particularly the cases in which the whole, or practically the whole, of the members of a council might be disqualified on some matters such as fixing house rents. The Committee felt that in such circumstances it would be desirable that the Secretary of State should have power to direct that the business in question should be transacted otherwise, perhaps by the appointment of an independent person or body of persons for that particular purpose.

Is the hon. Gentleman sure that information to that effect was received from the committee?

Perhaps the hon. Member has misunderstood me. That is one possible example; and I recall the hon. Member himself once mentioned to me that some other local authority should be asked to do it.

But you said "an independent person," and that is what I am challenging.

I was going to elaborate the point in a moment or two, but I do not see in what way the hon. Member can object to the definition which I have given. The report says:

"We recommend that power be given to the Secretary of State where the number of members of a local authority so disabled at any one time would be so great a proportion of the whole as to impede the transaction of any particular item of business to remove the disability or to give directions as to how the business is to be transacted, e.g., by the appointment of an impartial person to fix rents for houses "—
the hon. Member himself signed that report—
"and that he should also have power to remove the disability subject to conditions."
But that does not mean that the only way would be to appoint one impartial person. I said "person or persons" to be more comprehensive. I should think the best way would be to have several persons, and I should not expect any disagreement from the hon. Member on that point. In view of this unanimous recommendation of the committee my right hon. Friend felt justified in giving effect to their views in the Bill. To elaborate the point we have in mind about Subsection (8) of Clause 2 as regards dispensing power, that might be necessary, for example, in the case of a local authority the majority of whose members belong to a co-operative society, so as to enable the whole council to discuss and vote freely on a proposed contract or to accept the lowest tender. As for the alternative power, the precise form of any directions that might be given under the Sub-section would depend upon the circumstances of each case and would be determined after consultations with the local authority, but what my right hon. Friend has in mind as one of the possibilities—without definitely excluding others—is the appointment of a tribunal of three or four independent persons. If experience showed that the number of cases to be dealt with justified it, it might be found possible—I do not say it would be, but it might be—to have a standing tribunal which would be capable of dealing with authorities in any part of Scotland, so as to secure uniformity of decision. But that is merely a speculation, and there is nothing in the Bill to prescribe what kind of body might be asked to decide upon questions of this kind.

I hope that the House will agree to give a Second Reading to this Bill, which is a matter of urgency to members of local authorities in Scotland, many of whom have unwittingly fallen into this position, and I think that the immediate removal of these disabilities is urgently necessary for progress with the business of local authorities particularly in connection with housing in many parts of Scotland.

7.29 p.m.

Before I ask the Secretary of State some questions about this Bill I should like to clear up one point of dispute between us and the Under-Secretary. If we gathered his remarks aright he was not aware that this question of disability had arisen until recently. As a matter of fact these difficulties had arisen in the time of the first Labour Government of 1924, If the Under-Secretary will look at the Town Councils (Scotland) Bill, which was introduced on 15th April, 1924, he will find on page 719 of the Public Bills for that year the Bill which was introduced by the Labour Government, which could not be proceeded with because the Government went out of office. We were, therefore, rather amazed to hear the Under-Secretary say that this was the first occasion on which the matter had been brought to his notice. It is true that the present Measure differs materially from, and in some respects goes further than, the Bill of 1924. It is a Bill with which we are in general concurrence. We welcome the spirit in which it is designed, and we hope, although we are doubtful in some respects, that it will achieve the objects aimed at.

I want to put a few questions on specific points to the Secretary of State. Clause 2 provides that if a member of a council is held to have a pecuniary interest; if he is a member of a company or a society with which a contract has been made; if
"he or any nominee of his is a member of a company or other body with which the contract is made or is proposed to be made, or which has a direct personal interest in the matter,"
he is to be prohibited from voting or taking part in the proceedings relating to the contract. Let us see where this carries us. It is common knowledge that the Co-operative Wholesale Society in Scotland is the child of the retail societies. The retail societies have a pecuniary interest in the Wholesale Society. If, say, the corporation of Glasgow makes a contract with the Scottish Co-operative Wholesale Society, then under the wording of this Clause, as I read it, any shareholder in any retail co-operative society in Scotland would be affected. We ought to be clear about this matter. If the councillor is held to be the holder of a pecuniary interest; if he is a member
"of a company or other body with which the contract is made or is proposed to be made or which has a direct pecuniary interest in the matter under consideration "—

Yes. The subject under discussion. As I read the Clause, it means that if a contract is placed with the Co-operative Wholesale Society, then any member of a retail society is banned from discussing or voting upon that contract in the council, although his pecuniary interest in the contract with the wholesale society may be infinitesimal. It may be only one-millionth part of a pound, yet, as the Clause is drawn, members of the retail co-operative society, although their own society is getting no contract, will be held to be disqualified because the Cooperative Wholesale Society is getting the contract.

I suppose that what is really aimed at is the holding company. If the Clause is designed to get at the holding company, I have no quarrel with it. I should regret exceedingly if there were any alteration in the Bill which would permit a member of a council to get a contract or to be interested in a contract with his council and escape the law by the simple expedient of forming a holding company, and getting away with it in that way. But that is another pair of shoes from having a Bill which provides that a contract with the Co-operative Wholesale Society in Scotland precludes shareholders in a retail co-operative society from voting or speaking on the contract.

My second question is a simple one. It relates to the succeeding paragraph, Clause 2 (2, b), which relates to a councillor who is held to have a pecuniary interest in a contract if he is in the employment of a person—I suppose in this case person means also a body—with whom a contract is made. Suppose a council makes a contract for coal with a colliery company for the supply of coal for its gasworks, then any employé of that colliery company who may be a member of the city council or the town council will be automatically barred from speaking or voting on the contract. This not only affects colliers; I could think of 20 other occupations in which workmen are engaged where, if this Clause goes through as now drafted, the workman councillor will be forbidden to speak or vote on the contract. If the Secretary of State finds that our fears on this matter are justified, I hope that he will be prepared to amend the Clause so that the fears we apprehend may be dissipated.

My third difficulty is more serious. Will the Secretary of State look again at Clause 2 (8), which provides that if the numbers of members of a council disabled are so large that refusal to permit them to vote or speak would impede the public business, the Secretary of State may remove the disabilities upon application being duly made to him. What might happen there? I have here a document in connection with an application made from Stoke-on-Trent City Council, where 41 per cent. of the members of the city council are members of the Burslem Cooperative Society. There was a contract to be let for pasteurised milk. The medical officer of health demanded pasteurised milk, and the council had no option but to give the contract to the co-operative society, which is the only supplier of pasteurised milk. Forty-one percent. of the members of the council, theoretically, are trading with their own society. They applied to the Minister of Health for exemption from the disability provided for in the Act. What did the Minister of Health say? Here is a letter, dated 1st March:
"As you know, my predecessors and I, in the exercise of our power under Section 76 (8) of the Local Government Act, 1933, have on many occasions in the past few years removed disabilities imposed by that Section on members of the Stoke-on-Trent Town Council, who were also, either directly or through their spouses, members of the Burslem and District Industrial Co-operative Society, Limited. This action has been taken when we have been informed that at least one-half of the members of the council have been disabled under the terms of the Section. In connection, however, with a recent application from the council, I have had occasion to review the position and, on the basis of the figures now supplied by the council, which show that considerably less than one-half of the members "—
it is 41 per cent. —
"are under the disability, I do not feel that I can properly grant dispensations, and I have felt obliged to direct that a reply be sent as in the enclosed copy."

I agree. Therefore, we have arrived at this position that because the Minister of Health holds that 41 per cent. of the membership of the Stoke City Council is insufficient to warrant him in granting dispensations, 41 per cent, of the members of the City Council, almost one-half, are forbidden to speak or vote on the proposition with regard to the contract. The Secretary of State for Scotland now comes forward and says, in effect: "Give me just the same discretionary powers that my colleague the Minister of Health has in England." I put it to the House that these privileges are illusory. They do not mean anything, if you are going to remove the disability when 50 per cent. of the Council are affected and you refuse to remove the disability when 41 per cent. are affected. In those circumstances we have arrived at a state of affairs when local government has become farcical With out exaggeration I say that local government in such circumstances is being put under the control of minorities who do not represent and cannot represent the majority of the electors.

I hope the Secretary of State for Scotland will very carefully consider this matter. I know that he did not put the Clause in by malice aforethought, and I know it is a very difficult subject to deal with. We all share the object that he has in mind. We are not going to stand for anything that savours of or opens the door to corruption in any shape or form in local government, but there is a vast difference between corruption in local government and so tying yourselves by legal knots and difficulties that local government becomes impossible. I submit that what has happened in the English case at Stoke could well happen in Scotland under this Bill, unless we are exceedingly careful.

There is one further point on that matter. In the English Bill the Minister has power only to remove the disability, but the Secretary of State is taking power here to give directions as to the manner in which the business will be transacted. It is an exceedingly serious matter for the right hon. Gentleman to put himself in the anomalous and indefensible position of saying to a corporation like that of Glasgow, Edinburgh, or anywhere else in Scotland, "You have 50 per cent. or 40 per cent. of your councillors who are shareholders, direct or indirect, in a cooperative society, and, therefore, if you want pasteurised milk, for example, I will give directions as to how you will conduct your business on the city council." There was the ominous hint that we had from the Under-Secretary of State when he indicated that this might mean the handing over of the direction of business to a single individual.

I could not see it there, but whether or not it is in the report, it matters nothing. It is obvious that the Under-Secretary is unhappy about it now.

No. I said "person or persons" because that is a well-known comprehensive phrase. It docs not mean that the Government has any prediliction for having one person, and not several.

You are taking powers to hand over the direction of the business of a popularly elected local authority to some outside individual. I submit that that is a matter of fundamental importance, and I am certain that when it comes to be debated on the Committee stage, the Secretary of State will not be able to sustain that defence for an hour. Then there is the question of the fixation of rent, and I can see the difficulty that the Department of Health for Scotland might quite well be asked to undertake the fixation of a scale of rents.

No, but what staggered us was these outsiders coming in. In the last resort the Secretary of State can be shot at in this House, if his Department does anything foolish or stupid. We hear a great deal of talk these days about commissars being found on directorates and about there being all sorts of things in the world aimed at destroying local government, and we cannot in these circumstances permit this thing to come in here by a side door.

Now may I turn to another point and deal with housing? The difficulty has arisen here partly because of what is called the Aberdeen case and partly because of the fact that in Scotland there is a steadily growing number of towns where the bulk of the housing is municipally owned. In England that is not so, because private building comes in to a greater extent, but in Scotland practically all the housing that is being built to let is being built by the local authorities, and where you get a situation like that you are bound to have a state of affairs in which a growing number of councillors are themselves tenants of the council houses. The law at the moment is that no councillor can vote upon any matter which relates to housing if he is a tenant of a council house, but see how that spreads. In the Aberdeen case a councillor, in June, 1937, had the temerity to vote for a resolution which actually raised his own rent from £13 17s. 4d. per annum to £18 10s.

He did so, believing it to be in the public interest and believing that the rent was actually too low. But see what happened to him. He was promptly taken before the sheriff—this man who voted to raise his own rent, in Aberdeen, from £13 17s. 4d. to £18 10s. per annum—and was found by the sheriff to have been in contravention of Section 107 of the Housing (Scotland) Act, 1925, and, if you please, he was fined £3 for his temerity.

Local government in these circumstances simply becomes a farce. You cannot beat this in comic opera; Gilbert and Sullivan never staged anything better than this. The right hon. Gentleman now comes along with a Clause in this Bill designed to remedy that state of affairs. He says that nobody is to be allowed to vote or speak on any housing matter where he has any pecuniary interest, direct or indirect, in it. How far is this going? If I become the tenant of a council house, have I an indirect pecuniary interest, for example, in voting to keep out a dog-racing track or to keep a new public-house licence out of my neighbourhood? Yet, as the thing stands, on these and dozens of other questions the law can debar me from exercising my right as a city councillor and giving an honest vote upon these questions.

Let me now stake less extravagant suggestions, which I believe have already been examined by lawyers and which they greatly fear. A councillor in a council house cannot under this Clause vote on any question as to the amount of money that" is to be put in the pool for repairs, because, if you please, he has an indirect pecuniary interest in the matter, and he cannot vote upon the purchase of land for housing or upon any question which affects rent. In Glasgow we have about 55 per cent. of the members of the city council who are people of my own way of thinking, and about 45 per cent. of the members of the council are called Moderates. If this Bill goes through, any Moderate can put all our 55 per cent, of members in the cart by tabling a resolution that there is to be a £10 rise in all municipal rents, and the whole 55 per cent. will be unable to vote. Then they will come to the Secretary of State, and, poor chap, he will be between the devil and the deep sea, because if he exercises his discretion and removes the disability from the 55 per cent., he will be quarrelling with the 45 per cent. who are his own political friends on the Glasgow City Council.

All this is obvious nonsense and is clearly not the way to deal with this matter at all. I happen to know that the Parliamentary Bills Committee of the Glasgow City Council and the City Clerk have been examining this Bill, and they suggest an alternative method. The proviso to Clause 2 of the Bill states:
"Provided that this section shall not apply to an interest in a contract or other matter which a member may have as a ratepayer or inhabitant of the area or as an ordinary consumer of gas, electricity or water or to an in-forest in any matter relating to the terms on which the right to participate in any service provided by the council, including the supply of goods, is offered to the public"
The Glasgow Corporation suggest that you should say that Clause 2
"shall not apply to an interest in a contract or other matter which a member may have as a tenant or occupier of any house belonging to the council"
That is, as a particular individual, not as a general proposition. I think that a councillor should be prohibited from voting directly for a reduction in his own rent; I think he should be prohibited from voting on any matter which brings directly into his pocket any gain from the public funds; but surely, if it is and has been right for all these years that a man who may be a consumer of electricity on a large scale is to be entitled to and does vote for a reserve fund in the electricity department, or for a cheapening of the general rate for electricity, which he and all his friends may share, it is equally right that the consumer of municipal houses, because that is what he is, shall be put in no worse position.

I suggest to the right hon. Gentleman that the proposal made by the Corporation of Glasgow, that a man may vote on general issues, but not on particular issues benefiting himself, is one that he would do well to consider between now and the Committee stage. At any rate, I hope that before the Debate closes the right hon. Gentleman will be able to tell us, as the Lord Advocate told us on the previous Bill, that he will be prepared to examine the suggestions which we are making, not in any party or partisan spirit, but with a view to getting the maximum beneficial result for local government in Scotland. My hon. Friend the Member for Stirling and Falkirk (Mr. Westwood) knows a great deal about the details of some of these matters, and doubtless he will add to what I have said, but it would be of the greatest importance to local government in Scotland that the Secretary of State should not take a narrow, partisan, or class view of his responsibilities here.

I hope the right hon. Gentleman will not accuse me of taking a partisan or a class view, in view of the fact that I brought this in largely on the representations of the committee on which his hon. Friend sat.

I am putting the point to the right hon. Gentleman that there are certain consumers of electricity, say, on the Glasgow Corporation who are free, without let or hindrance, to vote upon electricity matters, and I suggest that, in view of the development of municipal building and council housing in Scotland, the same principle as applies to electricity should apply to housing. I am sure the right hon. Gentleman introduced the Bill with the best intentions in the world. I am not suggesting anything to the contrary. I say in public now, if the right hon. Gentleman desires it, that from the very hour that we approached him on this matter he gave every indication of his anxiety to put the matter right. But it is our duty here in this High Court of Parliament to put the questions I have put to-night and to press him to put the matter in order. I am sure that if he does examine these questions fairly he will give our points very considerable support.

8.6 p.m.

On the main principles we are all agreed that this is a good Bill and one which should speedily find its way to the Statute Book. We are all conscious of the fact that in this House we are perpetually placing fresh burdens on local authorities. The right hon. Gentleman went so far as to express doubt whether local government was in danger of breaking down. I think if that is true it is due to a certain extent to the difficulty of personnel in these days, the difficulty which I think will be found, both in Scotland and England, of finding a sufficient number of capable men and women who can give the necessary time to discharge the duties which are now placed upon them and which increase year by year. It will be an unfortunate thing if, as the result of an interpretation recently given to the law of Scotland, we were further to narrow the field of recruitment for service in local government.

This Bill does include certain very necessary safeguards. As the right hon. Gentleman who has just sat down said, nobody is going to quarrel with the provision that a councillor should not vote in relation to a contract in which he himself has a pecuniary interest. As the right Gentleman has also said no one wants to open the door to corruption in local government. But there do seem to me to be three classes of persons whose position may be subject to some controversy when we discuss this Bill on the Committee stage—persons who live in council houses and are councillors, co-operators and those in receipt of public assistance. It is perfectly true that all those three classes of persons in a sense have a pecuniary interest, though it does not seem to me to be nearly as great a pecuniary interest as that of the man whose firm is entering into a contract with the council. It is not in the same category. The councillor who lives in a council house, or even the councillor who is or has recently been in receipt of public assistance, may have something of value to contribute to the discussions of the council on that subject. I am expressing only my own personal opinion, but it does seem to me to be going a little too far to say that he may not take part in the discussions at all.

Would it not be sufficient in dealing with these categories of persons who live in council houses, co-operators and those in receipt of public assistance who are not persons whose firms have entered into contracts with the council, to provide that first they should notify their interest, and secondly, that they should not vote? Is it entirely reasonable to say they shall not take part in the discussions at all? We all appreciate the point made by the Under-Secretary, when he said it might be unfortunate if a man himself in receipt of public assistance were to sit in judgment on other applicants for public assistance. But is that a reason why he should be debarred from any discussion on the general principles on which public assistance is administered in his area?

I want to say a few words about Subsection (8) of Clause 2. I agree with the right hon. Gentleman in thinking that as it is at present drafted that Clause is much too wide. Of course, even more than hon. Members above the Gangway we on these benches look with the greatest. suspicion on anything in the nature of a dispensing power which is undoubtedly included in this Clause. I was a little startled by the phrase of the Undersecretary when he spoke; of the appointment of an independent person or body of persons. There is this very wide power to give directions, not merely to dispense with certain disabilities, but also to give direction as to the manner in which certain business may be transacted. It did appear from the speech of my right hon. Friend who introduced this Bill that it is not difficult to contemplate the possibility of some independent arbiter or arbiters. It does not seem to make very much difference whether the power is to be vested by the Secretary of State in one person or in a number of persons. What I am more concerned about is the position of the arbiter or arbiters as the case may be.

As the right hon. Member for West Stirling (Mr. Johnston) said, if the decision in certain cases is to be taken by the Secretary of State himself, then it is taken by somebody who is responsible to this House. But if it is going to be delegated to some independent person, then it is not the case that the Secretary of State will be funclus officio as soon as he has appointed the independent person, so that the decision will be left to the independent person whom it would be impossible to challenge on the Floor of this House or of the council chamber concerned? Therefore, I concur with what the right hon. Gentleman said that this Clause is too wide as it at present stands. We shall look forward to trying to amend it in the Standing Committee.

8.11 p.m.

I rise, for a few moments, to support this Bill which has had such a general welcome from all sides. It is the result of the labours of an admirable committee representing all parties and the local authorities. For a committee with a long title such as this Local Government Public Health Consolidation Scotland Committee, I think the memorandum is admirably short and lo the point, and has produced very good results. I think the House will agree that we owe a debt of gratitude to its members and to its chairman, Sir John Jeffrey, who has given such valuable service to Scotland now, and in the past. The main justification for the Bill surely lies in the words on the top of page 3, where it is stated that the existing law is unsatisfactory in several respects. As I see it, those unsatisfactory features might be said to be (1) that the existing law is not uniform in operation; (2) that, in some cases, disqualification under the existing law operates unduly where there is no serious conflict between duty and interest; and (3) it fails to operate where there is a substantial conflict in other cases. If I am correct in these assumptions, then there is clearly a case for this Bill. Members in all parts of the House have indicated that they feel the same way about it.

I like this Bill because it is reasonable and, I think, practical. A short Bill, it would be difficult to criticise at any length some of the provisions without embarking upon Committee points which would not be in order. But in its general principle of requiring that where there is beneficial interest, there should be no voting, it is sound because it tries to put a safeguard where there may be conflict between duty and interest. To disqualify a person from membership entirely because there is one special interest, one small aspect of local affairs in which a person concerned might have a pecuniary interest, is too drastic, and I agree with the junior Member for Dundee (Mr. Foot) when he says that possibly that sort of thing keeps good people from rendering service on the councils. It is the essence of democracy that, whilst we make our safeguards, we shall admit in the widest possible way all those who can render service to the State, whether it be locally or at the centre. It seems to me common sense that if there is to be disqualification it shall operate only for the special interest concerned.

Someone has said that this Bill brings us into line with the English Bill of 1933. That is not always necessarily a recommendation, but I think on this occasion we can say that to come into line with England, and in some respects to go a little ahead of England, is a good thing for Scotland. I look at England in this respect and paraphrase the words of the poet:
"I could not love thee half so well,
Loved I not Scotland more"
Clause 2, Sub-section (8) has raised a good deal of discussion. Without the Sub-section in question, obviously a council would cease to operate. I was interested to hear the Under-Secretary say that a council did exist in which all the Members were occupying council houses. I do not comment on that critically. One can understand it perfectly well. The right hon. Gentleman the Member for West Stirling (Mr. Johnston) pointed out that it is mainly municipal enterprise in Scotland which is building houses to rent at the present time. But one does come up against the difficulty of inventing a safeguard where the majority of, or the whole council, are occupying council houses.

I could not quite follow the point which the right hon. Member for West Stirling was making about pecuniary interest. It seemed to me that he drew the bounds very widely when he suggested that a greyhound racing track or the question of licences would raise a point of pecuniary interest. I am not a lawyer. One only sees these things from the general point of view of the layman, but I thought that pecuniary interest meant where a circumstance was liable to put money into one's own pocket. That may be a very rough-and-ready definition, but that is how I think the Bill might be interpreted by the layman. I have some slight anxiety about this Clause where the Secretary of State may either waive the disqualification that arises or direct how business shall be conducted. To go into that I fear would be dealing with Committee points, but I would like to make this general suggestion, that the final form the powers take, should rest on a body of persons and not on a single individual. It seems to me that if a single individual had the responsibility for deciding in matters like this—delegation of duties under compulsion as it were—would be very difficult duties to carry out and would possibly lead to complications whereas if the Department of Health were responsible or a Central Standing Committee set up to deal with cases from the whole of Scotland the machinery would work more smoothly. I trust that the Secretary of State will not dismiss that matter from his mind when he comes to reply. I am very glad to support the Bill, and I am sure that it will have a quick and smooth passage through the House.

8.16 p.m.

The words I have to say will be few and will be in general terms, but, first of all, may I say to the hon. Member for Dundee (Mr. Foot) that I will read with interest to-morrow in the OFFICIAL REPORT what he has said. His reference to the difficulty of getting suitable men and women for this work raised certain doubts in my mind, but I prefer to wait until to-morrow before I comment upon his observations.

Perhaps the hon. Member will allow me to tell him that I said there was difficulty, owing to the increasing burdens upon local authorities, in getting suitable men and women who can devote the requisite time to the work.

I will endeavour to relate the meaning of what the hon. Member has said to the position in which we are, and to the difficulties that may be before us—if there are any. I take very kindly to the idea that there should be as much elasticity as possible in the government of this or any other country, but the position that places itself before me in the Bill is government by dispensation. That appears to open out a great field of expediency, and we must, if we are to enter it, do so with very great care. Special reference has been made to contracts, and I would touch upon that point. I suppose we may speak as we think in matters which affect municipal authorities and the duties upon these bodies. I have great difficulty in determining what the ordinary member of a co-operative society could do which would be in conflict with his duty as a citizen if the society of which he was a member dared to quote for some contract with the local authority. On the question of pecuniary interest, which the hon. Member for Rutherglen (Mr. Chapman) has just mentioned, I think he properly used the term as meaning putting money into one's own pocket. If that be the measure I wish it could be taken as the measure, and then there would be no difficulty in making alterations to the Bill.

In regard to the position of co-operators, the average shareholding interest of co-operative members in this country is £18 10s. If you tried to work out what pecuniary interest would attach itself to the ordinary member of a cooperative society which had quoted in tender form for the requirements of its local authority, you would be entering into details of arithmetic which I should have very great difficulty in following. That is by the way. The sentiment of connection with a co-operative society might attract the member to favour his own society as a contractor, but that impression would be corrected if the person holding that opinion attended a quarterly meeting, because at that meeting he would find the discussion so contracted that the activities of the society were reduced to a businesslike form, run on the lowest possible margin. It would be a margin of this description, that tender forms would be made up and forwarded to the local authority. That would further reduce the pecuniary interest of any co-operator in that society.

The position is that we are faced with a principle. The idea is to prevent the ordinary member of the public who may be a co-operator from acting in such a manner that he would favour himself in a pecuniary manner. I am not always inclined to indulge in examinations of what we call principle, but I wonder as to the competency of this House to say much about it, because I have seen from time to time in past years, matters pass through this House involving not a simple share in a public contract, but millions of pounds of ratepayers' and taxpayers' money, through the medium of subsidies and other forms of subvention. I have heard Members of this House—I am not speaking against them and not condemning them—participating in discussion the result of which would be a direct, ample and. measurable amount of advantage coming to themselves. That has not been taken in this House as something that would endanger the moral principle of Members of this House, and if that can be conceived as permissible with safety to the moral principles of Members of this House, I cannot conceive that the meagre, even if measurable, amount of advantage that would accrue to an ordinary member of a co-operative society taking part in voting affecting, may be, £100 or £200 for a municipal authority, would endanger his moral principles at all.

I cannot conceive, from that point of view, why that fear exists. Take it as spread over the people with whom that co-operative member might be associated: but we have seen recently a Member of this House appointed to the highest position in the Ministry of Agriculture although he is a representative of the trade union of agriculturists of this country. He is responsible for all orders and legislation relating to agriculture, and not only will he be personally involved in the recommendations and the proposals made to this House, but actually and individually every member of his own trade union will be a recipient of the advantages that he may be able to give him. I put it to the Secretary of State for Scotland that we should not be perturbed about the possibilities of a humble member of the public who happens to be a co-operator and, by virtue of his public service, is elected by the citizens to represent them on the council of the town or burgh, or whatever the geographical part of the country may be.

If we are to be particular and meticulous in this matter we have to close up every avenue. Has the Secretary of State never heard of the direct trade relationship that can be traced between, we will say, the member of a local authority who is a private enterprise baker and who, from time to time, needs his shop painted, and of the intimacy that sometimes exists between that baker and the painter who is also a representative on the public authority? The avenues for that kind of thing are widely known, and I am afraid will not be disposed of, if they are touched at all, by the Bill. The fact that in the past we have made progress in municipal representation and administration by a general acceptance of the uprightness and honesty of those who present themselves to the people for their suffrages, and the capacity that the people have to select such honourable persons to represent them, should sway the Secretary of State in a great measure in his attitude towards this question of contract as it is dealt within the Bill.

8.25 p.m.

As has been well said, the principle with which we are concerned when we are discussing a Bill of this kind is to get rid of any possibility of corruption in the administration of local affairs, but surely it should not be beyond the wit of the Secretary of State for Scotland and his legal advisers to prepare a Bill that will eliminate effectively all possibility of corruption without imposing injustice, which is what we have in this Bill. It is at Bill directed against corruption, but one that most certainly imposes very serious injustice on quite honest and devoted servants of the community. On this side of the House there is a general attitude towards the masses of the people of this country that can be summed up by saying that every member of the working class should be associated with the political party of the working class, and every member of the political party of the working class should be a loyal co-operator. In other words, the general attitude is that every Labour or other representative of working-class interests in-a local authority should be a member of a co-operative society. We know that in. some cases that does not apply, but the movement all the time is in that direction, and more and more, as council after council gives majorities to working-class representatives, the members of those working-class local authorities will be co-operators. But here we have a situation in which, in many cases, it will be impossible for those majorities to carry out their ordinary administrative functions.

The right hon. Gentleman the Member for West Stirling (Mr. Johnston) drew attention to the fact that, owing to the way in which the wording of the Bill is framed, someone who is a member of a retail society in Glasgow might be affected if the Scottish Co-operative Wholesale Society put in a tender for a contract with the Glasgow Corporation. If that remark of the right hon. Gentleman is correct, if there is a possibility of the words being so stretched—and the Secretary of State for Scotland cannot deny that such an interpretation might be put upon them—one could have this situation: Let me take an industry of which the Minister has some knowledge, the steel industry. The steelworkers' trade union has an agreement with the Iron and Steel Trades Confederation, under which, when the profits go up, wages go up. It may be that the Glasgow Corporation, for instance, is wanting some steel for various purposes—housing and so on—and invites one of the steel companies to quote. Then it may be that a representative of the steelworkers' trade union on the city council, because he has an association and an agreement through his union with this company, would be affected. Indeed, in view of the possibility of the words being stretched as suggested by the right hon. Gentleman the Member for West Stirling, there would seem to be no end to the ramifications of a Bill of this description.

We know already how farcical the working of local administration can become as a result of such interpretations. We have heard the story of the Aberdeen man who was brought before the sheriff and fined £3 for voting for increased rents, and the light hon. Gentleman the Member for West Stirling said that Gilbert and Sullivan never had anything to equal that. That is indeed true. If the sheriff had told this man that he was being fined £3 for contravening the traditions of Aberdeen, or for destroying a legend that has provided much enjoyment for the people of this country, one could have appreciated it, and would have understood that the sheriff had a sense of humour; but when we find a sheriff put in the position of having to sit solemnly in a court and impose a fine of £3 merely because a man voted for an increase of rent for himself and those who occupy the same category of housing, that truly is of the character of Gilbert and Sullivan.

I was going to draw attention to the subject referred to by the hon. Member for St. Rollox (Mr. Leonard), and to ask what would be the effect if the Bill were made applicable to this House. I am certain that the Secretary of State for Scotland would be barred from many discussions and many votes in this House if the Bill were so applied. Not only would the benches on the other side of the House be empty, as of course they are now, but the Division Lobby would be empty also. A couple of week-ends ago I was reading the manuscript of a book about "Rank and Property" on the Government benches. It is a most amazing revelation. It is a farcical situation in which, with all the wealth that is behind the Government, and the continual pocketing of finances from the public purse on the other side, that we should be discussing this question of the co-operators and the trade unions.

If the hon. Member will forgive me for interrupting him, he seems to have failed to recognise the purpose of the Bill. If this Bill is not passed, there will be very many empty benches in local authorities in Scotland. The purpose of the Bill, though it may have certain defects which require remedying by Amendment, is to enable members of local authorities who are now disqualified to retain their seats.

I recognise that, and that is why on this side of the House we are supporting the Bill, but nevertheless it is farcical that, while we are discussing a Bill which is going to remedy an existing evil, we should be perpetrating an injustice against a great many representatives who are capable of giving the best possible service to the community in various parts of the country. I know of councillors myself—very good and able councillors—who are employés of the cooperative movement. According to Subsection (2, b), of Clause 2, if a person

"is a partner or is in the employment of a person with whom the contract is made or is proposed to be made"
he is regarded as having a pecuniary interest. I am of opinion that the Secretary of State for Scotland, with his legal advisers should be able to frame this in such a way as to enable members of a co-operative society to be excluded from this provision. Nobody could argue that the ordinary member of a co-operative society on a town council is going to get anything into his pocket out of a contract with the Co-operative Wholesale Society or one of the individual co-operative societies. The holdings of the individual members are of so small a character as not to count for anything. Let us be certain that we stop corruption in connection with local representatives, but let us not do injustice to this body of people.

In connection with housing, there are many good councillors who occupy council houses and who because of their experience in council houses and their association with other people living in such houses, are best fitted to give an opinion on such questions as whether the houses should be repaired or whether the rents should be increased or decreased. I am not going to argue whether they should have power to vote—although I would not withhold that power—but it is doing an injury to local government to debar such councillors, with their experience, from taking part in the discussion. Let us take the case of a business man with a seat on the Glasgow Town Council who lives outside the boundaries of the city. He knows nothing about council houses; he has no association with the people who live in them; yet he is allowed to get up and state his opinion on any question affecting council houses, while the councillor who knows most about the matter is debarred from taking part in the discussion. That is not right. The same principle applies in the case of the man who is on public assistance. No man wants to be in the position of having public assistance. If he is in that position it is because circumstances have forced him into it. He is being treated unjustly, because of the bad working of the system. Yet the very man who has most experience of the needs and desires of people in that position is to be debarred from taking part in any discussion about relief, though he is the one man above all others who should be encouraged to take part. I would appeal to the Minister to see whether it is possible, between now and the Committee stage, to amend the Bill, so that it may achieve the good objects for which it is designed without creating injustices.

The most undesirable thing that could happen, when more and more the working-class movement is advancing in local administration, when more and more there is a tendency for people to give a majority to the working-class movement on local authorities, is to create the impression that can be created by this Bill, that the desire is to take power away from the local authorities themselves and put it into the hands of the Department; to allow the Department to appoint someone who can make decisions over the heads of the local authorities themselves. This can be very dangerous, and I would appeal to the Minister to consider changing Subsection (8), Clause 2, in order to make it clear that if at any time the Department should have to interfere in the affairs of the local authorities there will never be any question, even though it is referred to in the report, of appointing some individual to decide rents or anything else. Let us encourage the advance which is taking place in local administration. We can get any number of representatives drawn from the trade unions and the cooperative movement. Let us see that, while we are endeavouring to prevent any possibility of corruption re-emerging, we do not continue to promote injustices against a large body of able and devoted local representatives.

8.43 p.m.

I do not suggest for a moment that the Secretary of State for Scotland is responsible for the evils we are living under as a result of the present system. We are, to some extent, indebted to him for his willingness to face up to the situation which has recently arisen with regard to representation on the councils in certain parts of Scotland. I take it that it is the will of the present Government, as well as of ourselves, that the local people should have the right to choose for themselves the men or women who are best qualified to represent them on any council, whether it be a town council, a county council or a district council. People expect, naturally, that when they do elect their representatives those representatives will have full power to administer the law, without being restrained by political opponents who may be in a minority. The question in which I am particularly interested is that the rights of democracy shall be maintained, that a man who is selected to sit on a town council shall have rights equal to those of any other member, providing always that he is not in a position where he would be subject to corrupting influences. All of us are agreed on that.

A town council in a part of my constituency has recently faced up to a situation like that. The majority of the council are members of the Labour party, and I believe that I am correct in saying that all of them are members of the local co-operative society. Owing to an opinion expressed by the town clerk of Stirling, the feeling has got around, naturally, that if that opinion is correct the position of the town councillor or the county councillor, as the case may be, is very seriously endangered, and that such a member cannot continue to be a satisfactory member of the council. I understand that in the Hamilton Town Council a contract was given to the local cooperative society after the opinion of the town clerk of Stirling had been given. The council unanimously decided to give the contract to the local co-operative society. One of the moderate members of the council drew attention to the fact that the opinion already expressed by the town clerk of Stirling would put these men in rather a serious position. Following upon that it was intimated that the local painters' society, who had been approached on this particular contract, threatened to take action against the members of the town council who were co-operators, in the belief, I suppose, that they were pecuniarily interested in the granting of that particular contract.

As a consequence we had a discussion with the Secretary of State for Scotland, and I am pleased to say that he met us in a very reasonable way. He agreed that the subject was of such importance that it should be brought as speedily as possible before the House of Commons. The Bill that he has submitted meets to some extent the difficulties in which local councillors in the different councils in Scotland are placed. I am not sure, however, that it is not capable of reasonable amendment. While accepting the Bill as it stands at the moment, we are taking advantage of the opportunity to point out certain of the anomalies which still exist, with the object of endeavouring to induce the Secretary of State for Scotland and his advisers to be willing to meet us in the matter by still further amending and improving the Bill. I do not know that I can add anything to what has been said by my right hon. Friend the Member for West Stirling (Mr. Johnston), who dealt with the disabilities under which the local co-operators in Scotland are suffering, pointed out the anomalies that still exist in the law, and expressed the hope, which is shared by all of us on this side of the House, that the Secretary of State for Scotland would be prepared to meet us reasonably on the matter. We are particularly anxious to secure that every man or woman who is chosen as a representative on a town, county or district council, or any other local body of a similar character, should have full power to carry out his or her duties.

Parliament imposes considerable duties upon local councils nowadays, and it would be particularly unfortunate if the law should be such that these persons were not allowed to serve, after having been chosen to represent the locality in which they live, and generally chosen because of their character. They are men and women of good character, otherwise they would be unable to secure seats on these councils. They are unlikely to be influenced by corrupt motives in regard to any question that may arise and conflict with their duties as public representatives. I hope that the Secretary of State for Scotland will give me some indication as to what is meant by Clause 2, Sub-section (1), which reads:
"If a member of a county council, a town council or a district council has any pecuniary interest direct or indirect in any contract or proposed contract or other matter"
What is meant by the words "or other matter"? I cannot conceive of the ordinary Labour member of a county or town council having any direct or indirect pecuniary interest in something that is described as "other matter," and which has not any particular name attached by which he could recognise it. I should like to know from the Secretary of State for Scotland what this really means. I would prefer, speaking personally, that everything that a town councillor ought not to do should be specified clearly so that he should know exactly what is expected from him and should not be held responsible for losing his seat in the event of his voting or speaking in support of something vaguely described as "other matter." Speaking on behalf of the local representatives of the co-operative society who are members of the Hamilton Town Council, I am pleased that something is being done to remove all the possible disabilities under which they would be suffering if the law were continued as it is at the present time.

8.54 p.m.

We have got the impression from the Secretary of State for Scotland that my right hon. Friend the Member for West Stirling (Mr. Johnston) received this Measure in rather a hostile spirit. It is true that my right hon. Friend examined the main objects of the Bill in a very critical manner and drew attention to some details that will require to be considered later on, but I am certain that the right hon. Gentleman will receive from hon. Members on this side of the House all the assistance that we can possibly give to him to get this Measure upon the Statute Book as speedily as possible. There are, however, certain details that we would like to see amended, and we shall certainly try during the Committee stage to get such amendments incorporated in the Measure.

I think my right hon. Friend put up an unanswerable case with regard to some of these details. While the Secretary of State may not be able to give us any assurance to-night, I hope he will keep an open mind on the matter, and will in Committee meet us as far as he can. We want to make this a workable Measure. It is designed to meet a very urgent situation, but although the situation is urgent there is no need to pass slipshod legislation through the House. We ought to pass a Measure which will deal with the practical difficulties as outlined by the right hon. Member for West Stirling. I have a very special interest in this Measure, because for some 17 or 18 years I was a member of a local authority. During that time questions of this kind did not arise. During most of the time the local authority had not started building what we call municipal or council houses. That is a recent development, and has given us part of the problem with which the Measure is intended to deal. At that time town councillors were not occupying municipal or council houses, but the situation is different to-day. Local authorities have been compelled to build large numbers of houses, and many of the councillors who are members of the working class have been compelled for very good reasons to occupy council houses. To-day they find themselves in an almost impossible position in the discharge of their duties as county or municipal councillors. I hope the Secretary of State will meet us as far as he can on this matter.

The situation from the co-operative point of view is very urgent and I hope that some better plan than is defined in the Measure will be found for dealing with the situation. It may not be advisable at this stage to go into the details. We can discuss them in Committee, but undoubtedly the co-operative movement is placed in a most invidious position. It is an organisation which during recent years has become a very important part of the communal life of the country, especially in the industrial areas, and it is very largely in the industrial areas that this particular problem arises. In the wider country districts the problem does not arise to the same extent as in the industrial areas, where the co-operative movement is strong. In these areas you find, as the Under-Secretary of State himself stated in his opening speech, that in one case the whole of the municipal councillors are members of the co-operative society.

I beg pardon; but I could name places where almost all the members of the municipal council are members of the co-operative society as well. There have been some municipal councils in my own area, where there is not a wholly Labour representation, where the moderates are members of the co-operative society because the movement is so strong that it is considered the right thing for a man to be a member of the movement. There will be opportunities during the Committee stage to discuss the points of difference between us. We welcome the Measure and I want to thank the Secretary of State for so readily bringing it forward after his attention had been drawn to the difficulties which have recently arisen. The trouble existed before public opinion was drawn to it, following the expressions of the Town Clerk of Stirling. Since then things have developed rapidly and the Secretary of State has shown commendable expedition in bringing forward the Measure. As far as this side of the House is concerned we will co-operate in the closest and heartiest manner in getting the Measure on the Statute Book as soon as possible, but there are some amendments which we should like to see made before it is placed on the Statute Book.

9.3 p.m.

I want to associate myself with the statements which have been made by my hon. Friends on this side of the House and to express my gratification at the speed with which the Secretary of State has faced the problem which is creating difficulties as far as Scotland is concerned. In accepting the general principle of the Bill, I must point out that there are questions of detail on which we shall seek to make further improvements to the Bill, but the Secretary of State can rest assured that, as far as we are concerned, it will be in no spirit of hostility but with a desire to make the Measure even better than it is now. The Bill seeks to remove some of the anomalies which are associated with administration in Scotland at the present time. The Under-Secretary of State wondered why this question had not been made a real issue before now. The explanation is simple. In 1889 the Act which we seek to change was placed on the Statute Book. In 1900 a Bill dealing with the burghs of Scotland was also placed on the Statute Book, and both Acts of Parliament left it possible for a member of a company registered under the Companies Act to vote for contracts which might benefit himself personally, or benefit the company with which he was associated. At that time the co-operative movement was only in its infancy, and no reference was made in these Acts to the exemption of a member of a society which was registered under the Industrial and Provident Societies Act.

The co-operative movement has grown. In 1889 to 1900 there was no co-operative society dealing with a supply of pasteurised milk; pasteurisation was not then carried out to the extent it is to-day. In those early days, not a single society carried out painting contracts, but as the co-operative movement grew, it reached a position in which it was able successfully to compete with private enterprise in tendering for such contracts. The Under-Secretary of State may rest assured that there were many of us associated with administration in Scotland who knew what the law was, but our opponents did not realise what it was until we were able to enter into the field of competition in regard to painting contracts. Repeatedly, members of local authorities voted for contracts going to co-operative societies, but it was always when the co-operative societies submitted the lowest tenders. Our opponents did not act in a similar way.

I remember one case of tenders for a supply of policemen's caps. The lowest tender was that of the Scottish Co-operative Wholesale Society, which was to provide caps at 4s. 9d. each, and the second lowest tender was that of a local firm at 7s. 6d. a cap. Although the "Moderates" were returned for the purpose of effecting economies, because of their hostility to the co-operative movement they voted against the lowest tender and in favour of the second lowest tender. Fortunately, in that case, as the contract was for the police services, it had to be approved by the Scottish Office. I happened to be in contact with the Scottish Office in another direction at that time, and when the lowest tender was not accepted, I was able to pass word to the Scottish Office to watch the tender when it came up for their approval. To their credit, when that tender was sent to them by the Kirkcaldy town council, they made the necessary inquiries as to why the local authority was prepared to accept a tender at 7s. 6d. a cap when there was a tender at 4s. 9d. a cap. The local authority was compelled to accept the lowest tender, and the policemen of Kirkcaldy, at least for a short period, went about with cooperative caps on their heads.

The point I am making is that in my long association with local administration I know of no case where, when a cooperative society has tendered, there has been any vote given by a co-operative member who was a member of the local authority for other than the lowest tender; but I have given a typical illustration of those who wanted to defend private enterprise being willing to accept a higher tender rather than accept the lowest tender when it was made by a co-operative society. In the case of that contract, we voted for it. We also voted for the cooperative society's tender for the supply of pasteurised milk. There were no other firms in Kirkcaldy that could supply pasteurised milk except one or other of the two local co-operative societies. It is true that under the law it was possible to disenfranchise all of us, but our opponents did not know what the law was, and we knew that if they wanted to take action, they were, under the Corrupt and Illegal Practices Act, compelled to do so within 21 days; and that if they did not do that, we were perfectly clear. I suggest to the Under-Secretary that that is the explanation why this did not become a real issue until recently. Under the 1889 Act, there is no reference to exemptions with regard to industrial and provident societies.

A greater difficulty has arisen as a result of the Housing Act, 1935. Under the Section that we are now to repeal, which deals with voting in connection with housing, it was quite competent to vote for the fixing of rents under the 1930 Act, although one could not vote for fixing the rents under the 1919 Act if living in a 1919 Act house. That has been changed now as a result of the passing of the Housing Act, 1935. Before that Act was passed, separate accounts were kept for all the housing schemes, and there could be no beneficial interest in voting to keep the rents of 1930 houses at a certain level if a municipal tenant who was a member of the town council concerned was living in a 1919 or a 1924 house. The position has been completely changed since the passing of the 1935 Act. Many of our town councillors, irrespective of party, were living in what, in Scotland, were considered to be at least semi-decent houses. Under the 1935 Act, there was compulsory removal from overcrowded houses to the new municipal houses. Prior to 1935, there were separate housing accounts, and it was possible to vote for a reduction or an increase of rents for 1923, 1924, 1930 or 1933 houses; but under the 1935 Act there was a unification of the accounts, and consequently, a vote for an alteration in the rent of houses in any of the schemes was bound to have at least an indirect beneficial effect upon the individual who was voting. If there was a housing pool, and if there was a vote to reduce the rents of the houses in any scheme, the time might come when there would be a deficit in the pool and it might be necessary to vote general increases to balance the housing pool. That is another explanation as to why there is a crisis in local administration at the present time and it is necessary to produce legislation to deal with some of the difficulties and remove some of the anomalies.

Reference has been made to the Departmental Committee's report in connection with this Bill. It is a memorandum that was issued with the Bill, and special reference was made to it by the Undersecretary. I have sat on innumerable Departmental Committees, and, quite apart from party politics, I have done all I could to help my country in the way of advice or suggestions for legislation. I can say that I have never sat with colleagues who have done more able and enthusiastic work than those who are at present engaged on work in connection with local government consolidation. I think the preliminary Bill which they have prepared is a monument to their energy and enthusiasm.

I wish particularly to speak of the work done by the official side of that committee in preparing the draft Bill of which this is a part. I think a tribute is due to those colleagues of mine who did such work in the interests of Scottish administration, but I do not think it was fair of the Under-Secretary to tell the House that I had signed this memorandum, because I did not do so. My signature is not upon it. I do not want to go into the details, but I do wish to point out that I did not agree with all the decisions that were reached. My duty as a member of a committee is to vote for what I consider best. If defeated I have to take the next best, and if I do not enter a caveat or state either my dissent or my disapproval, yet, as a good democrat, irrespective of consequences, I accept the decision of the committee. From the beginning I argued, rightly or wrongly, that a co-operative member had no real beneficial interest in any contract between the society of which he was a member and the town council on which he is a representative. I know that the Under-Secretary will not challenge my statement but it is recorded in the minutes that I dissented from the view that a co-operator, as such, could have a beneficial interest in these contracts.

I should say that we were hurried in our decision. I make no apology about that. I have already paid a tribute to the energy and I would almost say the enthusiasm with which the Secretary of State acted once he was convinced that there was danger to local administration and that grave injustice was being done and was likely to be done to a section of our local administrators. He took what, to my mind, was the right course, and he took it speedily and remitted the whole problem to the committee dealing with the consolidation of local government law. As I say, the memorandum which deals with our work had to be drafted hurriedly on the very day when it was sent to the Under-Secretary and no Member had the opportunity—certainly I had not—of going over the proofs and correcting them. I am not complaining of that. It was all due to the energy with which the Secretary of State tackled an urgent problem. I am sure that the Under-Secretary is the last person in this House who wishes to do any injustice tome personally, and that there has been some misunderstanding which led to his statement that the memorandum was signed by me. On that account I merely mention the fact that the decision of the committee was hurried, in accordance with the request made by the Secretary of State. I hope I have made the point clear. It is in no spirit of hostility that I refer to this matter, but we have to deal with facts as they are and not with facts as we would like them to be.

There is an outstanding feature of Scottish administration which applies equally to English administration. It is the fact that we have had, shall I say, a purity in local administration of which we are entitled to be proud. It is the duty of the House and of those who are keenly interested in local administration, to keep it as pure as it has always been and to see that there is no possibility of corruption in dealing with local problems. The local administrator as far as his public work is concerned, must be, like Caesar's wife, above suspicion, and the purpose of the Bill is to make sure that no one enjoys any real beneficial interests as a result of any vote cast by him on a local administrative body. But as has been pointed out, in remedying one injustice we must be careful not to create another, and I am sure that if a good case can be made out in Committee for any alterations that will improve the Bill, the Secretary of State will have a receptive mind for such proposals. The Bill seeks to deal, first, with what is in Scotland a real anomaly. A member of a co-operative society with that very indefinite and infinitesimal advantage—if you are prepared to admit that there is any advantage at all, which I have contested all along—to-day not only runs the risks of being fined but, strictly speaking, under the law as it stands, is liable to the loss of his seat if any four local government electors take the case to the sheriff.

The crisis in Scotland arose in my own constituency where the co-operative society tendered for the contract for the painting of a large number of municipal houses. A member of the council raised the legal question of how this would affect members of the local co-operative society if they voted for that society's tender. I want the House to know that it was the lowest tender. There was no question of trying to get an unfair preference for the co-operative society. I think the opinion of the town clerk of Stirling was very well founded. It was a very carefully drawn document in which he proved to his own town council that if members who were also members of the co-operative society, voted for that society's tender and if any four ratepayers within the specified period took the case before the sheriff, those members were liable under the law, not merely to be fined but to lose their seats on the town council. I advised the representatives of the local authorities at that time not to take any action immediately on that decision, because I knew, although I did not tell them what legislation was proposed, that the committee was working on the problem. But the trouble spread from Stirling to Saltcoats and from Saltcoats to Hamilton. In Hamilton they were unanimously in favour of defying the existing law and voting in favour of the tender of the co-operative society which was the lowest. In the case of Saltcoats a majority decided not to accept tenders from the co-operative society until the law was changed and that attitude has been taken by several other authorities in Scotland.

The result is that local authorities are being called upon, in some instances at least, to pay more in connection with contracts for housing and even contracts for bread. When it comes to the supply of pasteurised milk, it will be impossible for those contracts to be filled by local cooperative societies without disfranchising members of those bodies and not merely leaving them open to a penalty as in England. That is making local administration practically impossible and this Bill, at least in principle, seeks to deal with that anomaly. It seeks to bring the law, as far as I understand it, alongside the law in England. The law was changed in England in its application to co-operative societies in 1906. Then you had your Local Government Consolidation Act in 1933, and almost word for word you are going to get the assimilation of the Scottish law to that of England, but with at least one or two improvements. The difficulty that has really arisen in my mind is because of the special reference in the Memorandum:
"subject to such conditions as he may think fit to impose or to give directions as to how the business is to be transacted, e.g., by the appointment of an impartial person to fix rants for housing."
Even the reference in the Memorandum is specific in its application to the rents of houses and not to the general problem of administration associated with housing itself, because I can visualise direct interests even in connection with housing administration. But there is a specific reference only to rent. I am sure I am speaking for all on this side when I say that we could not stand up to those who live in municipal houses determining then-own rents. There are difficulties there and it is a problem that we have to face. It might lend itself to all kinds of difficulties in connection with administration. If there is a real difficulty in connection with rents because of these alterations in the law the final approval of the rents to be fixed, where this difficulty arises, might be left to the Department of Health, because someone is responsible in this House for answering for them. You could not discuss the decisions of the sheriff of a county in the House in the same way in which it is possible to deal with decisions arrived at by the Department of Health. We will place no obstacles in the way of the speedy placing of this Bill on the Statute Book. In principle we accept it. There is no difference between us and the Secretary of State in the principle that we have in mind, though there may be slight differences in the method of the application of the principle. I sincerely thank him for the speedy and courteous way in which he met that deputation of Scottish Members who are dealing with the problem. He is to be congratulated on the speedy way in which he has even got his colleagues in the Cabinet to accept this legislation. I hope he will understand that anything that savoured of an attack upon him was not in any spirit of hostility. Any criticism that there has been is merely directed towards this piece of legislation.

9.31 p.m.

I appreciate the hon. Gentleman's insight into the difficulties which a Minister must experience in getting legislation speedily brought forward, more particularly at a time like this when we have grave anxieties to contend with. I was, however, impressed by the situation that was developing, under which I thought a great hardship would be occasioned to a number of representatives on local authorities through no fault of their own. I thought it was quite possible that a situation might develop in which very many co-operators in different parts of Scotland, who were members of local authorities, would be deprived of their seats, and I felt that the matter was one which could not be allowed to stand. It is true that a Bill was brought forward in 1924 called the Town Councils (Scotland) Bill, but it did not become law, and it was not revived by the next Labour Government in 1929 presumably because the matter at that time had not reached the same state of urgency as to-day. I do not think anyone would say that, in point of fact, the existing law had brought about a difficult or dangerous state of affairs until fairly recently.

I was convinced that it was time to take action, and I thought the best thing I could do would be to refer the matter at once to the committee which was then, and is still, sitting, known as the Local Government and Public Health Consolidation (Scotland) Committee. I should like to echo the tribute which has been paid to that committee, sitting under the chairmanship of a very distinguished public servant, Sir John Jeffrey, formerly Permanent Under-Secretary of State for Scotland. It is representative of all parties. The hon. Member who spoke last, the hon. Member for the Scottish Universities (Mr. G. Kerr), and Sir Robert Hamilton, a former Liberal Member of Parliament, are all members. It has some very important represents- tives of local authorities, with wide experience of local authority work, and it has also some official representatives. I put the question to this committee as a matter of urgency. I knew they were examining, amongst other things, the question of the disabilities of members of local authorities arising out of an interest in contracts and other matters, and I thank the committee for helping me to bring the Bill forward so speedily by letting me have this memorandum in so short a space of time. It was got out hurriedly, but that was in order to meet the urgent demand that I had put to the committee.

In the main I believe that their recommendations are right and fair. They are rather in line with the present English law, but they go a little further in certain respects. In England, for example, anyone who has within 12 months been in receipt of public assistance is disqualified from membership of a local authority. The Committee have proposed that anyone who has been in receipt of public assistance within three months should be able to retain his membership of the authority but should not be able to vote on matters relating to that subject. In that matter there is a difference between the existing law in England and this Bill. Then there is another point of difference which has been the subject of a good deal of discussion to-night, and which we may continue to discuss on the Committee stage. That is the recommendation of the Committee, embodied in the Bill, that the Secretary of State should not only be able to remove the disability of members of a local authority who would otherwise not be entitled to vote, but should in his discretion issue directions for the transaction of a particular piece of business. The Committee put forward the view that in certain circumstances that power should be available and they gave an example—the fixing of the rents for local authority houses. They visualise a situation in which we might have all the members of a local authority living in council houses. That is not impossible. I could think of one or two cases where it must be within sight.

There might well come to be a state of affairs in which the Secretary of State was confronted with two choices. Either he could say, "I will remove the disability and let them vote on the subject of rents" or "I will direct how that matter should be dealt with" Some discussion has taken place upon how that direction should be applied, whether by the appointment of some outside body to act as a tribunal, or whether, as the hon. Member for Stirling and Falkirk and the right hon. Member for West Stirling suggested, by referring the matter to the Department of Health. Those are points which I should like to consider in Committee, but I should like to retain this power, which I think in the special circumstances of a case such as I have mentioned might be valuable.

There is one other point which was raised by the right hon. Member for West Stirling, and that concerns the Co-operative Wholesale Society. He asked whether Sub-section (2, a) of Clause 2 meant that if a contract was placed with the Cooperative Wholesale Society by a local authority a member of a retail society who was a member of that authority would be debarred from voting because of his interest. I am advised that that would not in fact be the case. Under that Clause a member is reckoned as having an interest if he is a member of a company with which a contract is made. A member of a retail society would not be disqualified if the council placed a contract with the wholesale society of which he himself was not a member.

It speaks of "the society of which he is a member." If he is a member of the Scottish Wholesale Society does it apply there?

I am advised that the fact that the contract was placed with the wholesale society would not disqualify the member of the retail society.

Is it not a fact that under the system of co-operation no individual member of a co-operative society is a member of the wholesale society? If his own society is a member of the S.C.W.S. or the C.W.S. he would not be cut out.

I think it is clear that he would not be cut out. The right hon. Gentleman has some doubt. He asked what was meant by nominee. The purpose is to avoid a holding company being formed simply to avoid the law.

Supposing there is a local co-operative society, not the wholesale society, and it owns a creamery and supplies not only the local schools but the county schools with milk. How will members of the co-operative society who are also members of the town council or the county council stand in relation to that?

I should not like to answer that question without looking into the point more carefully. It would depend on the actual circumstances of the contract. The hon. Member for Hamilton (Mr. Graham) asked in relation to Sub-section (1) of Clause 2 what was the meaning of the words "or other matter." The Clause reads:

"If a member of a county council, a town council or a district council has any pecuniary interest direct or indirect in any contract or proposed contract or other matter and is present at a meeting of the council at which the contract or other matter."
The words "or other matter" are intended to cover such things as public assistance or the rents of houses.

Have not public assistance and housing been dealt with already in another Clause?

Yes, but we need to put in these words in order to make sure that the position is covered under this Clause. I think that is the real reason for inserting those words at that point. A number of other points which have been raised might very well be discussed when we get this Bill in the Scottish Standing Committee. In the main I would agree with those Members who say that it is very necessary to preserve the purity of local government administration, and at the same time to do it in a way that is fair to those who give up their time to that work. I have a very high regard for those of all parties who give their time to local administration. I do not suppose there is any other country in the world in which local administration is so fairly carried on as in this country—and by this country I mean both sides of the Border. But I am anxious to see that in Scotland those engaged in local administration do not fall under an unfair disability, and I believe that in this Bill we have a Measure which will put them in a fair position and will avoid the dangers which would undoubtedly exist if the law is not altered. The position of those who are members of co-operative societies, the position of those who are living in council houses and the position of those receiving public relief—all those points have been considered, and if the Bill does not go as far as some hon. Members would like, at least it makes a considerable advance; and I hope that after the discussion upon the various points which will arise in Committee it will emerge a Measure which will really be helpful to local administration in Scotland. I think the House in general has welcomed the introduction of the Bill, and I am glad to have heard the speeches which have been made upon it.

Question, "That the Bill be now read a Second time," put, and agreed to.

Bill read a Second time, and committed to a Standing Committee.