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Repayment And Disqualification

Volume 892: debated on Wednesday 14 May 1975

The text on this page has been created from Hansard archive content, it may contain typographical errors.

' —(1) in any case to which section 1 of this Act applies the District Auditor shall at the same time as he makes the certificate referred to in subsection (2) thereof make a further certificate stating the sum or sums which and the person or persons whom he would have surcharged under each of subparagraphs ( b) ( c) and ( d) of section 228(1) of the Local Government Act 1933 but for this Act.

(2) Within 28 days of making the certificate required under subsection (1) above the District Auditor shall apply to the Court for such order or orders as the Court may think fit to make as hereinafter provided in respect of the said certificate and against any person or persons named in it.

(3) On an application under subsection (2) above the Court may confirm, vary or quash the said certificate and if it confirms or varies it may:—

  • (a) order that any person named in the said certificate as confirmed or varied shall pay to the Council which incurred the expenditude or suffered the loss or deficiency in question, or to its successor Council, such part as the Court things fit but not exceeding £1,000 of the sums for the expenditure or loss or deficiency of which such person was responsible as certified therein; and
  • (b) whether or not it makes an order for the payment of any part of such expenditure or loss or deficiency if the total thereof exceeds £2,000 and any person responsible for authorising or incurring it is or was at the time of his so doing a member of a local authority, may order him to be disqualified for being a member or elected to a local authority for a specified period not exceeding five years.
  • (4) The Court shall not make an order under subsection (3) ( a) or ( b) above if the Court is satisfied that the person authorising or incurring the expenditure, loss or deficiency in question acted reasonably or in the belief that his action was authorised by law, and in any other case shall have regard to all the circumstances, including that person's means and ability to pay.

    (5) Any person liable to be affected by any order made in proceedings under any of the foregoing provisions of this section shall be entitled to appear and be heard in such proceedings.

    (6) The Courts having jurisdiction for the purposes of this section shall be the High Court except that, if no sum specified in the certificate given under subsection (1) above exceeds the amount over which county courts have jurisdiction in actions founded on contract, the county court shall have concurrent jurisdiction with the High Court.

    (7) Any expenses incurred by a District Auditor in complying with the foregoing provisions of this section shall so far as not recovered from any other source be recoverable from the local authority from the audit of whose accounts such expenses arose or from the council which is the successor to that local authority.'—[ Mr. Raison.]

    Brought up, and read the First time.

    4.25 p.m.

    With this, it will be convenient to discuss the following amendments:

    No. 14, in Clause 2, page 3, line 13, after first 'of', insert ( a)'.

    No. 15, in line 15, at end insert:

    'and
    (b) any sum or sums which the court may order to be paid to that council.'

    I should explain straight away that Amendments Nos. 14 and 15 follow from new Clause 1. The new clause is to be taken in conjunction with the present Clause 1 and will, in effect, become Clause 2 of the Bill if it is accepted by the House.

    The House will realise that our opposition to this shameful Bill is deepseated. As the debate continues this afternoon I am sure that it will become apparent that our position has been strengthened rather than weakened during our period in Committee.

    We accept the notion of the rent loss certificate introduced in Clause 1 and the procedure by which a district auditor, dealing with the failure to implement the Housing Finance Act 1972, shall not apply the normal surcharge procedure—which also entails disqualification where the surcharge is £500 or more—but instead shall issue a certificate setting out whom he would have surcharged and by how much.

    We accept this procedure for two reasons. The first is that, as we have repeatedly said, we have no desire to be vindictive and believe that justice should be tempered with mercy. We want our approach to this to be eminently reasonable, as it was in Committee. The effect of the certificate is that it identifies the people concerned but makes it possible not to apply the full rigour of the law which was operating at the time when these acts took place.

    Secondly, we accept the rent loss certificate procedure because it can be a means of ensuring that the business of making up for lost rents falls on the relevant community—in other words, that it falls on the people who benefited from the failure to implement the Act or, at least, elected the councillors who defied it.

    We believe that that again is a right ingredient in the Bill. So far, so good. Clause 1 in itself is not in all ways unacceptable to us. Where we part company from the Government is in the way that Clause 1 precludes the possibility of any financial burden or electoral disqualification—except in the case of the original Clay Cross surcharge, which we come to under Clause 4—falling on councillors who deliberately defied the law when they refused to implement the Housing Finance Act. Make no mistake about it: it was deliberate defiance.

    The position was made absolutely clear during the passage of the Housing Finance Act. Moreover, as I recall, on the Second Reading of the Bill my hon. Friend the Member for Southend, West (Mr. Channon) made it clear when he said:
    "The existence of default powers does not give a local authority the right to default on its statutory duties … default on a statutory duty is a breach of the law."—[Official Report, Standing Committee E, 23rd March 1972; cc. 4256–7.]
    The law was absolutely clear, and I do not believe that any councillor caused it to be broken except deliberately, though our new clause strengthens the safeguard against a penalty being imposed on anyone who acted
    "… reasonably or in the belief that his action was authorised by law."
    In other words, we seek in our new clause to make it completely impossible for anybody to bear a penalty or burden unless he has clearly and knowingly breached the law. We do not want anyone to suffer penalties unfairly. But we insist that to give this immunity from the consequences of actions in defiance of the law can only be an encouragement to similar breaches of the law in the future. We can all list examples of how this might occur.

    This is our fundamental objection to Clause 1. It is a matter of profound principle, and one where we disagree with the Government's approach.

    4.30 p.m.

    There is a further reason why we believe that the Secretary of State, the Attorney-General and their colleagues are wrong. The Government are taking this step before the full facts are known. This is one of the several crucial differences between the affairs that we are discussing at the moment and the Poplar example which has featured so much in our discussions. It is entirely wrong in principle to bring forward this measure before the facts are known. It is also foolish in practice. Moreover, it is a breach of the undertaking given by the Prime Minister on 4th April, when he said:
    "Only when we see the full extent and magnitude of the problem will it be possible for to to make our recommendations to the House and this we shall do."—[Official Report, 4th April 1974; Vol. 871, c. 1445.]
    We still cannot see the full extent and magnitude of the problem. In many ways we know very little more than we knew when we started on this issue a year and a half ago. We have discovered certain facts in Committee, but they are extremely limited. We still do not know, for example, the names of the authorities where surcharges may apply. As it happens, the district audits are proceeding very slowly and in nearly all cases have been suspended. I can understand that the district auditors may take the view that it makes sense to suspend audits while awaiting the results of the legislation, but it adds to the difficulties. We do not know what it is about which we are legislating. That cannot be a good basis for legislation. We know little more than that the sum involved may be £1·5 million spread over 400 councillors.

    We know that in cases where the audit has been completed, apart from the special audit at Clay Cross, there has been no surcharge or disqualification imposed. We also know now—this was the one valuable fact to come out in Committee—how relatively small are the sums to be recovered in all but one or two of the possible instances. But, essentially, we are in the same position as we were in April 1974.

    We cannot believe that it is right to decide whether all these councillors should be let off while we are in ignorance of the facts. We think it especially wrong, if not tragic, that the Secretary of State and the Attorney-General should promote such a procedure when the rule of law and the sovereignty of parliamentary government are under challenge on many sides. What would they say, for example, if some local authority in the future decided not to impose the rent increases which possibly will be required, perhaps by legislation, next year or even this year? It is on the cards that we may have legislation. We are in danger of having this deeply offensive community land legislation on the statute book. If it goes on the statute book, it must be implemented. No one must defy it. But people will be profoundly opposed to it and will have before them the example of what has happened to those who defied the Housing Finance Act 1972. The Government are setting a most dangerous precedent.

    What do we propose to set up in substitution for the Government's procedure? Our clause sets up a scheme devised by my hon. and learned Friend the Member for Southport (Mr. Percival), to whom I pay tribute and express my thanks, which could achieve a moderate answer to this admittedly very difficult question. In Committee we tried to persuade the Government that in its essentials it offered a real opportunity to take the heat out of this difficult matter, and came up with an answer which managed to combine moderation and common sense with a final upholding of the principle of the rule of law which we believe to be so important. I hope that the House will think carefully about what we are proposing again in this debate and will ensure that it is supported.

    In saying that, I am encouraged by two statements that we have had from Ministers during the passage of the Bill so far. On Second Reading the Secretary of State said:
    "I do not present our conclusions to the House in any spirit of dogmatic certainty that we have got them exactly right still less in a spirit of triumph."—[Official Report, 24th March 1975; Vol. 889, c. 50.]
    When I heard those words I was extremely grateful, because they appeared to indicate that the right hon. Gentleman was prepared to listen to what we had to say, and it was my hope that he would accept amendments which we put forward that were clearly more reasonable than the Bill's proposals. I acknowledge that we are to have some concessions from the Government today. However, I emphasise that they are useful but minor. We believe that it is not too late for the Government to accept the more fundamental amendment set out in our clause.

    In Committee the Under-Secretary said:
    "I confess that we are not entirely satisfied with the Bill as it stands."—[Official Report. Standing Committee D, 17th April 1975; c. 194.]
    He had our full support in saying that. But, again, cannot he see that in the approach put forward in this clause and in our other amendments we are not attempting to wreck the Government's proposals? Cannot he see that they are a genuine and serious attempt to improve them? The hon. Gentleman said that he was not entirely satisfied with the Bill. Here is a chance to improve it in a way which might begin to make it, although not wholly acceptable to the country as a whole, much more acceptable than it is at the moment. The Government must know that they have introduced a measure which has caused profound distress among very many people of whom a large number would normally be sympathetic to their party. Many people feel that this is perhaps the worst of all the actions taken by this present Government.

    When the Under-Secretary made the statement to which I have just referred, we were debating the method of collecting money which had not been collected. But I do not think that the hon. Gentleman confined his remark to this point. Therefore, I hope that we shall have from the Government some recognition that they still have not got it right. Let them prove the good intentions that they have expressed by accepting this clause which is based on the scheme put forward in Committee and which was never undermined by the Government. All that the hon. Gentleman said in defence of the Bill was that Government supporters believed that the Bill had got it about right. He did not set out to give a detailed defence of his approach to this matter, as opposed to the approach of the Opposition.

    The essence of our proposed scheme is that the possibility of financial penalty in place of surcharge and of disqualification should remain. But we have several important modifications to that. First, the full rigour which was required under the 1933 Local Government Act need not be exacted. The kind of modifications introduced in the 1972 Local Government Act should be applied in this Bill.

    Secondly, the guilt, if I may call it that, of an offending councillor would have to be clear beyond all doubt. I do not say that the Bill gives any reason to suppose that innocent people might be brought to book. But we have deliberately emphasised this point. We do not want anyone to suffer who has not committed an offence or defied the law.

    Thirdly—and this is very important—the decision whether penalties should be imposed should lie with the court, and that, in effect, will mean the High Court. This point was advocated during Second Reading in the eloquent speech by the hon. Member for Liverpool, Toxteth (Mr. Crawshaw), who said something which is bound to command a great deal of support; namely, that by putting this decision into the hands of a court, rather than into the hands of the Secretary of State or even of Parliament, it is possible to take this highly contentious matter to some degree out of the political arena. I submit that there is very good reason for doing so.

    It is also true that the courts are highly experienced in making the kind of assessments or judgments that would be required under our new clause, because that in effect is what they are doing the whole time. Given that we have landed ourselves in this very contentious political dilemma, in our view it would have been better to take the question of what penalties should be borne out of the hands of the politicians, who are inevitably caught up in this difficult wrangle, and put it into the hands of the dispassionate courts.

    Would the hon. Gentleman apply this principle only to cases where local authorities incurred wrongful expenditure or where they did not collect money that they should have collected, or would he apply it to cases where other public authorities did the same thing? Would he like the courts to take the effective decisions in both cases?

    That is an extremely general question. I am not clear what sort of example the hon. Gentleman has in mind. My approach throughout has been to look at the matter in a specific way, because we need a commonsense answer. We shall betray ourselves if we talk in terms of wide generalisations. I hope that the hon: Gentleman will forgive me if I do not give him a clear-cut answer on this point, because I do not think it is necessary to do so.

    Fourthly, I believe that our scheme overcomes the weakness of the Government's approach, because it would come into action only when the facts were known. Although the legislation would be completed before the facts were known, before the rent loss certificate had been issued and so on, nevertheless the actual decision about the type of penalty—whether there would be surcharge or disqualification—would be taken only when the facts had been brought to light through the procedure of the district audit. Because we have complained again and again that it is wrong to legislate with lack of knowledge of all the facts, it must be accepted as a powerful argument that it is much better to know what one is doing.

    Therefore, the essence of this approach is that once the rent loss certificate has been issued the district auditor would apply to the court. The court may, first, order that any person named could be liable to up to £1,000 towards meeting the deficiency, and, secondly, if the total loss in any particular area is over £2,000, it may impose disqualification of up to five years on those responsible.

    The differences between this approach and what would have prevailed if the Bill had not been brought forward are, first, that there is a maximum fixed to the amount of the liability. Moreover, the extent to which people would have to meet that maximum—in other words, the amount they would have to pay—would be determined in the light of the circumstances.

    Secondly, the raising of £500 to £2,000, as the point where disqualification may be incurred is quite simply a reflection of the change in the value of money over the passing of the years. However, coupled with this is the stipulation that one does not have to go the whole hog. If one disqualifies, one does not have to disqualify for the full five years. It is possible for the court to specify that in the circumstances it should be one year, two years, or three years, or whatever is the appropriate amount for the disqualification.

    I emphasize that under subsection (4) there would be no order if a councillor acted
    "reasonably or in the belief that his action was authorised by law."
    Subsection (4) also says that the court should have regard to
    "all the circumstances, including that person's means or ability to pay."
    Therefore, if the objection is made that the burden falls equally on the rich and the poor, the court has the opportunity—as it has in the not exactly parallel case of the ordinary fine—to make a decision about what is appropriate. Those who might argue that the people concerned were often very poor must recognise that there is this important qualification in our approach.

    4.45 p.m.

    Those liable to be affected by an order would have the right to appear and be heard in the proceedings. In other words, this scheme makes it possible to deal with those who defy the law in a way that is appropriate to the degree of their defiance, rather than under the perhaps too blunt instrument of the 1933 Act which allowed only a five-year period for disqualification and full surcharge. However, it sticks to the vital principle that a person must not be able to break the law with impunity, even if he has encouragement from the Labour Party in doing so.

    I can hardly believe that the hon. Gentleman is suggesting that the Conservative Party encouraged people to break the law created by the Housing Finance Act.

    How does the hon. Gentleman reconcile what he has just said with the fact that a number of councillors of one council were surcharged by the district auditor, asked to meet the Minister's civil servants in London and then let off the whole of the surcharge on the understanding that they would go home and be good boys?

    I do not know what the hon. Gentleman is talking about, but we shall have a chance to develop that point in the debate which is now taking place.

    During the course of the Committee proceedings the Under-Secretary argued and put forward the objection that the scheme that we were introducing would entail proceedings that would be long-drawn-out. Obviously, court procedure will take a little time; nobody would dispute that. We do not accept that there is any particular need for long-drawn-out proceedings, because the rent loss certificate would set out the essential facts.

    The Government's approach to this whole question is far more long-drawn-out when they propose to make it possible to spread the recovery period over no less than five years, with even the possibility of an extension. That five years would be five years of bitter resentment by those who derive no benefit from the refusal to implement the Housing Finance Act 1972. I should have thought that at least the hon. Member for Derbyshire, North-East (Mr. Swain) would know how bitter the resentment will be among people who are liable to have to pay the penalty for something they never did.

    The hon. Gentleman does not appear to have done his homework. Is he aware that in the year immediately prior to the refusal to implement the provisions the Clay Cross Council was the only council in England, Ireland and Scotland—the whole of Great Britain—which reduced its rates by 3p to the benefit of everyone living in the district?

    The hon. Gentleman should be careful about what he says in defence of the Clay Cross Council, but we shall have ample chance to discuss that matter when we reach Clause 4.

    If there is trouble in the court proceedings and if they take time--as I accept they may well do--that is the inevitable consequence of defying the law. We cannot get away from the fact that if people defy the law there are bound to be—or there should be--court proceedings, and they cannot necessarily be skimped.

    This scheme gives every opportunity to be reasonable, to be merciful and to ensure that bitterness is avoided. It substitutes a somewhat different notion from that of the surcharge as we know it, but it does so in the most fair and commonsense way that is possible. It also--and this is vital—upholds the view that it is utterly wrong for a Government to be able to come to the aid of their own political supporters in the way that is proposed in the Government Bill. That is the shame of the Government's approach. The Opposition's approach confirms that the law is there to be obeyed and that those who expect to defy it and to be let off must think again. Facile talk about wiping the slates clean is not enough. As the House knows, this is a very grave matter. I commend cur new clause to the House.

    It will probably be for the convenience of the House if I now give the Government's view of the new clause. The hon. Member for Aylesbury (Mr. Raison) has moved its Second Reading with fairness and moderation. If one can judge by his speech, the whole atmosphere is very different from the atmosphere on Second Reading of the Bill.

    I should like to be able to say that, having given full consideration to the new clause, the Government can accept it, but I cannot so advise the House. However, I acknowledge that it is a carefully constructed attempt, as one would expect from the hon. and learned Member for Southport (Mr. Percival), to mitigate the rigours of the law for the benefit of those who would otherwise have been surcharged and might have been disqualified for failure to implement the Housing Finance Act.

    To those persons, whether in the House or outside, whose consciences do not permit them to accept any retrospective concession in favour of those who fail to obey the law, the clause is the Opposition's answer. We must be absolutely clear about it. The existing applicable law, the 1933 Act, gives those who are surcharged the right to apply for a declaration that they acted reasonably or in the belief that their actions were authorised by law. It gives power to the Minister to relieve them of surcharge, wholly or in part, assuming the figure is right, and the declaration relieves them from disqualification.

    It follows naturally that, in putting forward the new clause, the Opposition must be saying that that is not sufficient in the circumstances of this case. They must be saying that, in the special circumstances of this matter, it is right not to be content with those provisions but to go much further by way of retrospective relief. We on this side of the House very much welcome that view. We think that it is right. Whatever may have been said on Second Reading, whatever extravagant language may have been employed here or outside, that is the official Opposition view, and we welcome it.

    Indeed, the clause implicitly accepts several of the assumptions underlying the Bill. The first is the need for legislation to deal with the aftermath of the Housing Finance Act. It is a pity that some of the Second Reading speeches used such language as "the most serious threat to our constitution", and did not spell out what we have always said, and what I said in trying to wind up the Second Reading debate, that if the Opposition had been in Government they, too, would have taken legislative action.

    Secondly, the clause accepts that there is no immutable principle which governs the period or even the facts of disqualification. This is quite new. The clause makes it purely discretionary. It retrospectively quadruples the minimum amount of deficiency which would otherwise, under the applicable law prior to the 1972 Act, have resulted in disqualification. We welcome that new principle.

    Thirdly, it accepts that that part of a deficiency which is not ordered to fall on councillors will be paid, as the Bill provides, by tenants or ratepayers.

    Therefore, the difference between our approach and that of the Opposition has become much clearer and much narrower than during those stirring and noisy hours during Second Reading. We say "Let us wipe the slate clean". The hon. Gentleman anticipated that phrase, which, incidentally, is not mine. It is that of Mr. Neville Chamberlain. We say "Let us have no ragged edges". The Opposition say "We do not ask for a pound of flesh but only for a few ounces".

    To get those few ounces, the Opposition provide that every case which would have been surchargeable must go through the courts. That is a new principle, which we cannot accept. We cannot see how it could possibly help the situation with which the Bill is intended to deal to have case after case paraded through the courts, irrespective even of the wish of those concerned.

    Our broad principle is, as it always has been, to let those who benefited pay. Certainly, to that principle we give the latitude, which the hon. Gentleman accepted today, the latitude given to local authorities to make their own decision as to whether these sums should fall on the rates. We know that that is a political decision which they will have to make. They will have to make it in full knowledge of the possible political consequences.

    The principle of the clause is to punish first and then recover from the beneficiaries or the ratepayers.

    The principle that we are advocating is "Find out". It is a large part of our objection to the Bill that it proceeds in absence of the facts. The first thing we are aiming to do is to find out the facts.

    That may be, but there is also the situation of punishing first and then recovering from the beneficiaries or the ratepayers, because until one knows the extent to which the surcharged councillors, or councillors subject to the equivalent of surcharge under the clause, will pay, one does not know to what extent one must recover. We believe that the result is the worst of both worlds. In particular, it fails to wipe the slate clean.

    5.0 p.m.

    We believe that the precedent for wiping the slate clean is clear and persuasive. Despite the many hours we spent on it in Committee, I make no apology for returning to it today. The background to the Audit (Local Authorities) Act 1927 was in many ways similar to the background to this Bill. Of course it was not identical. We would not expect the circumstances to be identical. Precedents are not—or, at least, very rarely—founded on identical circumstances. That Act, like this Bill, involved a substantial number of councillors—about 100 in all. Strong feelings were aroused about the events which led to the passing of that Act and which were similar to those leading to this Bill. The law was defied. Although for a time the law may have been in doubt, it became certain, and thereafter it was defied. Whatever may have been the original intention of those who put forward the Bill—Mr. Neville Chamberlain, the Minister of Health, and others—as it went through Parliament it was amended again and again to enable those councilors to be relieved of penalty who, even whilst the Bill was going through Parliament, continued deliberately to defy the law.

    That Bill and its amendments gave greater relief than does this Bill. It remitted, and enabled the Minister to remit, surcharges which had already been made—in that case for excessive payments. Here we are dealing mostly with deficiencies, but the principle is the same. Indeed the hon. and learned Member for Southport said:
    "I do not know whether there is much difference, but if one is worse than the other, unlawful expenditure is a bit worse than simply failing to do something."—[Official Report, Standing Committee D, 29th April 1975; c. 308.]
    He may well have been right. At any rate, in doing so, the Act relieved 97 councillors from the virtual certainty of prison, which, at that time, followed automatically from failure to pay a surcharge.

    The Attorney-General is employing a clever lawyer's argument. Could he not find an earlier precedent than that of Mr. Chamberlain? Is not there an earlier precedent than that of Mr. Chamberlain to advance to support his case?

    I am making the case which I have to make and which I believe is right, on the basis of a precedent which, in my view, as the House will hear, is perfectly strong and valid. It is not necessary to go back any further, although there may well be precedents nearer our time. Let me deal with one at a time.

    By a series of manoeuvres designed to wipe the slate clean even of the consequences of defiance carried on almost up to the Royal Assent, the Bill relieved councillors of the new penalty of disqualification written into the Bill itself which, in the original form of the Bill, they would have suffered if they had continued, as indeed they did, to defy the law. That original intention was removed by amendment. That amendment removed the penalty of disqualification from many.

    The Bill was introduced in May 1927. Over two years earlier, in April 1925, the House of Lords held that the overpayments were unlawful. Honourable Members have reminded the House of the times in which we live today. The year 1927 was not a shining example of peace within the United Kingdom. The Minister wished to remit all the overpayments, but in February 1927 the court unexpectedly said that he could not do so in the case of those surcharges which had already been the subject of action in the courts. Therefore there were two classes of overpayment—those which the Minister could remit under the existing law, because they had not been the subject of court proceedings, and those which because they had been the subject of those proceedings, he could not remit. In that difficult situation and dilemma the Minister decided to legislate to solve the problem.

    I accept the point made in Committee that the Bill introduced a new penalty of disqualification, but in solving the problem as a matter of urgency it was the circumstance of continuing defiance of the law which called upon the Minister to bring in that legislation—indeed within a few weeks of the decision in the Dore case. That was the main purpose of that Act. I adhere to the view which I expressed before. A general change in the law was made. The main purpose was to deal with a situation comparable to that with which we are dealing in the Bill today.

    In its original form the new penalty of disqualification would have applied in every case except where audit had begun and surcharge resulted before 1st April 1927, that is to say, shortly before the introduction of the Bill, which was in May 1927, when it was generally known that the Bill would be introduced. The whole basis upon which that was justified was that the measure was known about because there had been publicity. On Second Reading it was pointed out to the Minister that councils were still paying out illegally. To that he replied:
    "I think that where warning has been given, and everybody knows now that there is to be a change, it would be unreasonable to say that people who went on disobeying that warning should escape."
    In general that was an impeccable sentiment. In case there was any doubt about his meaning he added that
    "the date of the final decision of the House of Lords is known, and that is really the date from which everybody knew what the law was."—[Official Report, 15th June 1927; Vol. 207, c. 1034.]
    that is to say, April 1925.

    With that statement I entirely agree. Mr. Chamberlain said that everybody knew the law from April 1925. I agree. Any over-payments made after that date could only have been in plain defiance of the law. Mr. Chamberlain said that it would be unreasonable to allow to escape disqualification—though it was a new penalty—anyone who defied the law after the decision of the House of Lords.

    About two weeks later the Bill was in Committee. In Committee, a proviso was inserted into the disqualification clause. The purpose of that proviso was to do the very thing which the Minister, only a week or two earlier on Second Reading, had said was unreasonable because it exempted from disqualification any councillor who had been or would be surcharged in respect of any expenditure or loss incurred before 31st October 1927—some months ahead.

    As a result of that, the test for exemption from disqualification was no longer audit before the Bill was introduced, but overpayments in deliberate defiance of the law so long as they were made no later than three months after the amendment, nearly six months after the introduction of the Bill, and two and a half years after the date when, as the Minister clearly said, everybody knew what the law was and that it would be unreasonable to allow those who went on disobeying it to escape disqualification. Plainly, he regarded the greater evil as leaving ragged edges, or a slate which had not been wiped clean.

    I am sure that the right hon. and learned Gentleman does not wish to mislead the House. He said that the proviso to which he was referring was introduced in Committee. If he looks again, he will find that it was not. The proviso was in the original Bill, but the date in the original proviso was 1st April 1927. The Committee proceedings were on an amendment at that date to substitute 31st October, that date being designed to give the Poplar Council the opportunity to give proper notice to terminate its contract with the trade union. Is that not a very different state of affairs from what the right hon. and learned Gentleman has just presented to the House?

    I do not know what the hon. and learned Gentleman is quarrelling with in relation to what said.

    The date in the proviso, originally 1st April 1927, for the reason which I gave—that people already knew that this legislation was coming forward—was altered to 31st October of that year because, and only because, by doing so certain councillors would be protected from disqualification, notwithstanding their deliberate defiance of the law. If the hon. and learned Gentleman can show that is wrong, he will have his opportunity to do so, but I am satisfied that it is right and that there cannot be any doubt about it.

    The retreat had begun. It was a retreat, be it noted, specifically related to disqualification of those who had deliberately defied the law.

    Let us now turn to the surcharges and we shall see how the retreat progressed. On Second Reading the Minister had said that, until the House of Lords decision, councillors may have been uncertain of the law. He continued by saying that
    "it was on that ground that I considered in this case it was proper for me to remit that surcharge, although, of course, the law having once been decided by the House of Lords, it would not have been proper for me to remit a surcharge if the council had gone on paying those wages, after it did actually know the law."—[Official Report, 15th June 1927; Vol. 207, c. 1029.]
    5.15 p.m.

    In our Committee discussions the hon. and learned Member for Southport did his best to escape from the precedent of the 1927 Act. Indeed, he argued that the law was not clear until the judgment in the Dore case in February 1927, which was the immediate reason for bringing in the Bill. Even if that were so, it would not help his argument, because the Minister in fact remitted overpayments which had been deliberately made up to 31st October 1927, which was eight months after the Dore case. But that is not right. The hon. and learned Gentleman was clutching at straws when he put forward that argument, because we have what the Minister said in the debates. It was he who said that the law was clear, and he had no doubt about it, from April 1925, the date of the decision in the House of Lords. In the clearest possible terms he said that it would not be proper to remit a surcharge if the council went on overpaying after the House of Lords had made the law clear.

    The Minister found himself squeezed into the position that he could not achieve his objective of wiping the slate clean unless he was prepared to remit surcharges in respect of unlawful expenditure incurred long after the House of Lords decision. He did it in three ways—first, by exercising his power to remit under the old law, whenever he could; secondly, by the direct operation of the 1927 Act, whenever that applied—and he did his best to make it apply to every case that supervened upon the introduction of the Bill—and, thirdly, by an ingenious mixture of the two. He did it directly by legislation through Section 2(6), which automatically cut off enforcement proceedings for surcharges in mid-stream and by amendment of Clause 4 so as to leave intact his powers under the old law where illegal expenditure was incurred before 31st October 1927. That was a late amendment to the Bill.

    The Minister, having given himself the power to do that, notwithstanding that the expenditure was in the class which he had said could not be justified because the law was known, then used those powers up to as late as August 1928 to remit surcharges on Poplar councillors of over £17,000 for the year ended 31st March 1927 and over £8,500 for the year ended 31st March 1928; that is, expediture incurred up to 31st October 1927. Those accounting periods were respectively one to two years and two to three years after the House of Lords had made the law clear and the Minister, in his original words, had said that he could not justify remitting the surcharge.

    I am not criticising the Minister of the day. He took a commonsense path. He fulfilled his objective of wiping the slate clean. Of course, he might have taken some such course as is proposed in the new clause, but he did not. In order to wipe the slate clean he found himself constantly amending the Bill and relieving councillors of surcharges, exempting them from disqualification, and, indeed, saving from imprisonment, at any rate, 97 councillors and others, many of whom, as I have said, continued to defy the law after it was made clear.

    The Bill was backed, and I assume that his actions were approved, by the distinguished Attorney-General of the day, the future first Viscount Hailsham. At any rate, Sir Douglas Hogg, as he then was, saw no reason to resign.

    On Third Reading the Minister delivered himself of the most impeccable sentiments, which have been more than once quoted in our debates, to show that he did not intend to condone defiance of the law. It may not have been his intention, but his actions in those circumstances spoke louder than his words, for condone it he did.

    I maintain that, faced with a problem as difficult as that of my right hon. Friend, and in many ways similar to that problem, the then Minister found a similar commonsense solution. In circumstances like those and these the better course is not the course that the Opposition propose, which will result in court case after court case, but rather to cut off and wipe the slate clean.

    Has it ever occurred to the right hon. and learned Gentleman as he recites these precedents that if one bases one's argument wholly on precedent, as he is doing, one will be in no position at all to resist people who break the law in future? They will simply spout again the precedents which the right hon. and learned Gentleman has spouted to the House and the Committee. There will be absolutely nothing to fall back on. Therefore, if the argument is based entirely on precedent, as it apparently is in the right hon. and learned Gentleman's eyes, he is undermining the law not merely on this occasion but for future occasions.

    I am grateful to the hon. Gentleman. I shall be coming to that very point in a minute or two.

    I was referring to the Opposition's argument that the purpose of Mr. Chamberlain's Bill can be distinguished because it set up a new system, that of disqualification and so on. Of course it did that, I agree, but I ask the Opposition what real difference that makes. Mr. Chamberlain's Bill plainly removed, and enabled him to remove, the penalties for defiance of the law, and he did not hesitate to do so.

    What does it matter that in doing so he introduced this new system? If the present Bill made some general change in the law regarding audit—improvement, it may be—in addition to what it now does, would hon. Members opposite abandon their opposition to it? Of course not. No doubt we could have done that. I do not believe that it would have been an open or frank thing to do, because we know the purpose of this Bill. Mr. Chamberlain undoubtedly had the purpose in his Bill of deflating a situation in which about 100 councillors, many of them very popular councillors, were deliberately defying the law, and he added to the Bill to do so a provision for disqualification.

    We have argued over other precedents. I believe them to be valid, but I do not believe that the House would be helped if I spent much time pursuing them in detail now. The 1927 Act, in my view, is the clearest precedent that one could have.

    Turning to the point which the hon. Member for Aylesbury properly made, a point which I do not shirk, I do not suggest that the existence of a precedent means that it must be followed; nor, indeed, looking at it from the other side, that the absence of a precedent has the opposite effect. If one took that view there would never be any precedents. I do not suggest that a precedent is a substitute for one's own judgment, but it is an indication of how Parliament has looked at a comparable situation in the past, and, therefore, it is something that we are entitled to take into account and to derive benefit from when trying to solve a similar problem.

    I do not suggest that there are no ways other than ours of solving the problem. This is a real problem, as the hon. Member for Aylesbury has fairly, frankly and frequently agreed, today and in Committee. It exists, however distasteful that may be. I believe that our solution is as fair as it can be. It will not be improved by departing from Mr. Chamberlain's principle, that once one starts wiping the slate clean one had better finish the job. That is the basic reason why I cannot accept the new clause, well-intended though I agree it is. If it is pressed to a Division, I invite the House to reject it.

    Like the murderer in "Macbeth", I expect, the word "Amen" has stuck in the Attorney-General's throat. Notwithstanding the sweet reasonableness and the gentle tone of his reply, he will not hide from us or from the country the fact that the Bill is a thoroughly sickening measure. I have no doubt that the Attorney-General suffers from embarrassment about it, just as I am sure that many Labour Members will come to regret the day that they ever supported this measure. I believe that many will, even today, be thoroughly ashamed of the course which they may be taking.

    It is a sickening measure simply because it treats the rule of law with utter and complete contempt. It is not just that people who deliberately defied the law hoped that they might be able to avoid the consequences of their wrongdoing: they were encouraged so to think. They were complimented by a leading member of the Labour Party at a meeting of the National Executive—a man who is now a senior Minister.

    I am obliged for the help. This is not a Second Reading debate. Perhaps the hon. Member for Burton (Mr. Lawrence) will address himself to the new clause.

    I was addressing myself to the clause, Mr. Deputy Speaker, and prefacing my remarks with the reason why I felt so strongly that it should be accepted.

    It is precisely because this measure is a contempt for the rule of law and because the new clause which my hon. and learned Friend the Member for Southport (Mr. Percival) has devised with great skill and ingenuity upholds the rule of law, and, as my hon. Friend the Member for Aylesbury (Mr. Raison) said, tempers justice with mercy, that the clause should be accepted.

    The new clause upholds the rule of law in two respects. First, it places emphasis upon the courts of law and gives them a function in the fair ordering of the unsatisfactory state of affairs which has resulted particularly in being merciful to councils which have not wilfully continued to defy the law. Also, it underlines the principle, which is important at this time in our history, that councillors everywhere must be subject to the rule of law. It was never as important as it now is because, as we read in the papers and as we have seen from what has happened in recent months, there is unfortunately in some councils a slide from respect for the rule of law. There has been an abuse by councillors in some parts of the country of the powers vested in them under the law. Councillors have to exercise far greater power, particularly in planning matters, than they have ever exercised in the course of the development of those councils.

    Does the hon. Member want the same sanctions to apply to Ministers?

    5.30 p.m.

    The sanction of the rule of law must apply to everybody. I am merely underlining the fact that councillors must now be made aware of the fact that Parliament, of all places, will not tolerate any abuse of the rule of law. That is particularly important since the rule of law is beginning to slip throughout the country, and it is, therefore, all the more important that we dig in our heels and safeguard and enforce the rules. That is why the clause is so important.

    I listened with care to what the Attorney-General said and with the respect that a junior member of the Bar always accords to the leader of the profession. However, I found his objections to the clause pitiful. He has gone back again on the plea of Labour Members that the slate must be wiped clean. For years I have been defending villians in the courts of this part of the world—

    They would have loved to have the slate wiped clean. Everyone who offends against the law and then sees the consequences of the law visited upon him wants the slate wiped clean, particularly if the wiping of the slate means that he does not have to suffer the consequences of his lawlessness. We are prepared to see the slate wiped clean for those who did not deliberately and wilfully continue to transgress. But that is not what Labour Members want. The rule of law means that those who wilfully offend against the law with the full knowledge of the consequences will not have the slate wiped clean and that the consequences must follow.

    The second argument to which I take exception and which the Attorney-General has advanced in criticising the clause concerns precedent. I will not even begin to touch on the arguments which occupied hours in Committee and which were based on precedent. The Attorney-General has been shown to be particularly weak in his reliance upon precedents. Just now he said that he was not completely relying upon precedent and that in the end he relied upon his own judgment. In Committee, however, he relied for hours upon precedent, and upon feeble precedent at that.

    I will not go through the argument, but we do not accept that what Mr. Chamberlain did in 1927 is a precedent for what the Attorney-General is seeking to do now. Two wrongs cannot, do not and will not make a right. If Mr. Chamberlain's action in 1927 was the same as the action which is contemplated by the Bill it was equally a contempt for the rule of law and it was equally wrong. The Attorney-General has said nothing to persuade me that our new clause is wrong, and, therefore, I support it.

    If this new Clause were being proposed as an amendment to the normal legal provisions which govern the surcharging of councillors I for one would greatly welcome it as an improvement on the existing law. The Opposition, and particularly the hon. and learned Member for Southport (Mr. Percival), have done the House a service in devising this flexible and more responsive procedure which should supplant the more rigid provisions in the 1933 Act and the 1972 replacement of it. The question is whether it is apt for dealing with the consequences of the Housing Finance Act.

    I say categorically that I deplore the action of the Clay Cross councillors and the other councillors throughout the country in choosing to disobey the law as it was clearly laid down. It is at present overwhelmingly necessary in a country where the democratic machinery is working to adhere to the law and for the consequences of not doing so always to be more severe than the consequences of doing so, however much one may deplore that law. My borough council faced the problem and, although it had great misgivings, it decided, I am glad to say, to adhere to the law.

    It is utterly to be deplored when any politician pretends to hold out the hope of absolution for transgressions of the law in the future. No hon. Member is entitled to say that his Government or the House of Commons will be prepared to pass legislation which will confer that absolution for acts done or to be done. However, the question is whether the particular circumstances of the Housing Finance Act and its consequences are quite as simple as to fit into the principles I have just enunciated.

    It sticks in my craw to hear the excitable speeches from the Opposition, to which we have not been treated today but which we heard on Second Reading, which suggested that it is a fundamental principle of this country, always applied, that when a public official—using that word generally to include Ministers—trangresses the law and by so doing places a burden on public funds, he is always made to answer for it out of his own pocket. That is not the case, and it ought to stick in the craw of the hon. Member for Aylesbury (Mr. Raison) to claim that it does.

    If I remember correctly, the hon. Member had some peripheral connections with Northern Ireland affairs in the last Conservative Government. He might recognise the parallel which I propose to draw. I do not propose to go in detail into the matter of interrogation in Northern Ireland in the period between 1971 and 1973 because that would be out of order. However, I intend to refer to it for its relevance to what is before us here. Here we are considering the sanctions which we, the national authority, should apply against representatives in local authorities who defy the law and impose a burden on public funds.

    It is, therefore, relevant to consider how the House deals with its own. What do we do in respect of a member of the executive at national level who transgresses the law or who is in charge when the law is transgressed and condones, positively or by his admission, activities which result in public expenditure? I refer, of course, to the fact, which perhaps many hon. Members have not picked up, that no less than £90,500 has so far been spent by way of compensation to people in Northern Ireland who were victims of what was euphemistically called "interrogation in depth"—that is, torture.

    I will not go into the argument whether it is torture because I have the authority of the former Lord Chief Justice of England for condemning the actions as illegal, which is all that matters for this purpose. [Interruption.] Hon. Members may put their own interpretation upon that. I refer hon. Members to page 14 of the report, where Lord Parker asserts:
    "The procedures were and are illegal.
    More relevant to this clause, he says on page 13:
    "If any document or Minister had purported to authorise them, it would have been invalid because the procedures were and are illegal by the domestic law and may have also been illegal by international law."
    We have had the case before us recently, to which surely in considering these matters in the Bill we must pay attention, of whether we have required the Minister who was responsible on that occasion to foot the bill for his transgressions.

    The hon. Member for Rutland and Stamford (Mr. Lewis) says that the Minister did not know about it. Alas, it is a worse offence to be the man in charge who does not make the inquiries and does not wish to know but commits acts of torture. That is as far as I want to go into the matter of substance. It is a clear parallel. If we are not prepared to make Ministers at national level answer for the charges which their illegalities have placed upon public funds we might just hesitate for a moment before we conclude that making people pay for the financial consequences of their illegalities is a fundamental principle which ought to apply through all our proceedings.

    When I read time and again the serials in the vendetta of Mr. Levin against the Attorney-General I wish he would turn his loquacious intellect to the subject matter that I have mentioned and call for Lord Carrington to pay out of his rather more ample pockets the £100,000 which his illegality has forced on public funds.

    I have found it difficult to establish whether in law in this country Ministers are personally responsible, and can be personally sued for, the illegalities which they commit in the performance of their official functions. I am clear of only one thing as a result of my researches, and that is that the point is obscure. It looks to me as if it is possible for Ministers to be sued in this way.

    That brings me to my next point which is more clearly relevant. The question is whether the responsibility for incurring this expenditure attaches exclusively to the councillors in question or is a shared responsibility. The answer is surely that it is a shared responsibility. The councillors were guilty of the initial breach of the law. But the extent of the financial consequences of that breach was the doing of the then Minister for Housing and Construction the right hon. Member for Brighton Pavilion (Mr. Amery). He was given by the Housing Finance Act the power to appoint a housing commissioner. He was given that quite clearly for a purpose.

    Order. I have been trying to follow the relevance to this clause of what the hon. Gentleman is saying. I know that he will quickly come to the point.

    5.45 p.m.

    When we are considering whether the relatively rigorous content of the new clause should apply rather than the relatively less rigorous content of the Bill as it is, it is surely relevant to consider the extent of the blame which attaches to the councillors in question and whether that blame attached only to them or was shared by other authorities, in this case another authority clearly under the control of the House. It is on that point that I want to dwell for a few seconds.

    Is it not a fact that the councillors concerned were continuously warned by officials of the council but took no notice? If that is the case, as reported in the Press, how can a higher authority be held to be responsible?

    If the hon. Gentleman will pay me some attention I will try to explain. The Housing Finance Act conferred upon the Minister a power, not an obligation, to appoint a housing commissioner. It did not do that for fun. It did it for a clear, implied purpose, which was that if there was a local authority that was defying the Act Parliament wanted to ensure that by some substitute method that defiance could be curtailed and corrected. The question arises in the most extreme form when we ask whether the Minister could have been brought to book legally for not using the power which was conferred upon him by the statute.

    Order. We are straying very wide from the new clause. There will be plenty of opportunity for wider issues, as will be seen from the Order Paper. We must deal with the merits of the new clause and Amendments Nos. 14 and 15.

    I would be approaching this matter in a very curious way if I did not think that it was relevant, in deciding to what extent we should apply these sanctions, to ask whether the responsibility was shared with a Minister. These sanctions—

    Order. The hon. Gentleman just cannot do that. It is quite clear that this new clause, which the hon. Gentleman and the House will have read, does not deal with the Minister or his authority. I must ask the hon. Gentleman to confine himself to the new clause.

    With the greatest respect, Mr. Deputy Speaker, I would ask you to consider this proposition. We are frequently talking about matters in debate when we have to envisage issues which are not referred to in words in the provision before us. We decide whether to make a provision as to such-and-such an effect and naturally—we would be failing in our duty if we did not—we bring in such considerations as are relevant in deciding whether that provision should be enacted. I suggest that it is relevant to the degree of rigour of the sanctions to ask whether the responsibility was exclusively confined to the councillors or was a shared responsibility between the councillors and the Minister. I can assure you, if it assists, that I have no intention of uttering more than a few sentences on this point. Indeed, I would probably have concluded by now had I been allowed to continue. I suggest that it is relevant to a consideration of these provisions—

    I have been enjoined by the Chair to be brief, and I never defy the Chair. I would be grateful if I could be allowed to develop my remaining few sentences in peace.

    I suggest that it is arguable, on the basis of one case, which was Padfield v. the Minister of Agriculture in 1968, that the Minister could even have been required to exercise his functions under the statute to minimise the loss to public funds that would otherwise occur even though the statute gave him a power and did not impose upon him a requirement to exercise that power. I also suggest that if anyone had referred this case to the Parliamentary Commissioner—so far as I know, no one has done so—it is conceivable that the Parliamentary Commissioner would have ruled that there was maladministration in the Minister's not exercising his powers. That is conceivable, because if he had done so the loss to public funds and the burden upon rents, rates or taxation would certainly have been less than it is now.

    Is it not a fact that it was clearly the case at the time that there was an alternative power and that the Minister, in exercising his judgments as to which power to use, also had to consider which power would be more effective in all the circumstances of the case?

    It is obvious that the Minister's decision was not effective in minimising the cost. If the Minister had intervened in the manner permitted to him, and almost enjoined upon him, by the Act, the non-collected revenue would have been enormously less than the deficiency which resulted. Those two points persuade me that it was a shared responsibility.

    First, it is arguable that the Minister could have been legally compelled to intervene if somebody had taken a case on the basis that I have described. Secondly, the Parliamentary Commissioner could well have ruled that it was maladministration on his part not to exercise his powers. If that is the case—

    The point that the hon. Gentleman is making is utterly fallacious. It is the very point that was taken to the Court of Appeal by the Clay Cross councillors in one of the stages of their developing opposition. It is the very point that was dealt with by the court when it held that the Minister's action in this regard was perfectly lawful.

    I have told the supposedly learned hon. Gentleman before that I am always moved to wonderment by the errors committed on these matters by those who have acquired a legal education. As I understand it, all that was at issue in the legal proceedings was whether the surcharge was correct and whether it should be enforced. I do not think that the court had any right to inquire whether the Minister could or should have exercised his functions. That is a separate question to which the House will address itself when deciding how complete the responsibility of the councillors is in this matter.

    I persuade myself rather reluctantly on the grounds that I have brought forward that the responsibility is a shared responsibility. Therefore, the situation is as messy as we all know it to be. In those circumstances, but not in any normal circumstances, it is right on this occasion to use this unusual legislative device to wipe the slate clean.

    I am obliged to the hon. Member for Islington, South and Finsbury (Mr. Cunningham) for the few observations that he made on the new clause, which were wholly favourable to it. I hope that he will forgive me if I do not take up all the other matters that he raised, their connection with this matter being rather slender. I hope also that neither the hon. Gentleman nor the House will allow themselves to be distracted from the issue raised by the new clause by the very many other interesting subjects. I am not trying to belittle them; they are interesting matters. On some of them I think that the hon. Gentleman was wrong. My hon. Friend the Member for Burton (Mr. Lawrence) referred to one such matter. Of course there are matters of substance to be followed up in another context.

    I hope that the House will want to come to a decision fairly quickly on the new clause. I appreciate what the hon. Gentleman said about the new clause. I hope that he and others will appreciate that what he said about it is a good argument for voting for it when the opportunity arises.

    Anxious as I am to say something about the further speech of the Attorney-General and although it is a great temptation to follow him along many of the paths that he trod, I shall resist the temptation to be anything like as long as the right hon. and learned Gentleman. However, if he thinks that we feel any less strongly about this measure or any less strongly about his part in it, he is wrong. We feel equally strongly about both as we ever have done.

    The Attorney-General was seeking in his opening observations to suggest that there is not much difference between us now that we have tabled the new clause, That is either disingenuous or downright misleading. There is still the world of difference between us, and I cannot believe that the Attorney-General does not see it.

    As it stands, the Bill relieves indiscriminately and from all penalty, be it financial or disqualification, an unknown quantity of unknown persons, all of whom will have so defied the law that the already generous provisions for relieving them will not suffice. That is why it is necessary to have this legislation. It relieves those concerned of all penalty and it deprives the public of all protection from a repetition of similar conduct.

    I suggest to the Attorney-General and to the House that there is the world of difference between a Bill which does that and a Bill which would do what this Bill would do if the new clause were added to it. The new clause preserves penalties both financial and by way of disqualification, but accepts that in the circumstances of the situation relating to events following upon defiance of the Act there may be call to deal with the particular situation in a particular way. We are absolutely and fundamentally at odds with the Government because we say that it is totally wrong to do what Clause 1 does. Clause 1 does a hundred times as much as Clause 4 by relieving all the councillors who, despite the generous terms of the present law, would still be liable to be penalised. It relieves them of all those penalties and does not substitute any other kind of penalty.

    How did the Attorney-General seek to persuade the House that it should not accept the new clause? I suggest that he did so by putting forward a series of totally specious arguments about the clause. There would be no difficulty in operating the clause if it were introduced. As my hon. Friend the Member for Aylesbury (Mr. Raison) has said, it would dispose of the whole matter a good deal quicker than what is proposed by the Government. The Attorney-General has spoken about an endless series of cases going to the courts. So far as we know, there are a total of about 400 councillors and about 12 councils, so there are possibly 12 cases to be dealt with by the courts. That is not a high price to be paid for finding the right solution.

    I suggest to the Attorney-General that the arguments he has advanced directed to the clause are totally unconvincing. The clause would provide a simple way of dealing with the matter, a way which would remove all the political angle. One of the troubles with the way in which the Government are proceeding is that they will lay themselves open to the suggestion—and many feel that it is much more than a suggestion—that this is a political party safeguarding its political friends. The simple way to avoid that is to take it out of the political arena and put it into an arena in which the persons concerned are well versed and well experienced in dealing with situations like this. Why not do ourselves the favour of taking out some of the political heat? It is nonsense to say that this is a complex, prolonged and difficult procedure.

    6 p.m.

    I am sure that the hon. and learned Gentleman appreciates that if the new clause were adopted the result would be that for many months and possibly years actions would go from court to court and to the House of Lords. It is ridiculous to talk about its being a simple measure.

    I do not accept that. I am told that the number of councils is 18 rather than 12, but we do not know whether those 18 would have been surcharged or would be the subject of a rent loss certificate. In some cases it is still to be decided whether they are to be saved by the Newcastle amendment or by other considerations, but at the outset there are 18 to 20 cases. I do not accept that the procedure need take anything like as long as the hon. and learned Gentleman suggests, and I reject that argument.

    In addition to taking this matter out of the political arena, the procedure we are putting forward has the further positive advantage of enabling those who are being dealt with to make representations to the court. That is a most important consideration. The Attorney-General's principal reason for rejecting the cause seems to be his reliance on the precedents to justify what is being done. I am astonished that he persists in that view and puts forward so many bad arguments in support of it. He even said that in many ways the background was similar. It could not have been more different.

    If the right hon. and learned Gentleman will look at the cases as I have done, he will find that it was accepted by the district auditor and by the courts at all stages that the Poplar councillors genuinely believed that what they were doing was permitted by law.

    The hon. and learned Gentleman should not from a sedentary position say "rubbish".

    No. The hon. and learned Gentleman cannot get up until I have finished. The facts to which I refer come from the cases.

    I should not have said "Rubbish", I should have said "Entirely misconceived". In Committee I gave the hon. and learned Gentleman chapter and verse showing that he was completely wrong in what he said.

    The hon. and learned Gentleman knows what I think of the so-called chapter and verse he gave me. It is not nearly as good as the chapter and verse I have quoted. I can only invite hon. Members to look for themselves.

    I should like to know precisely how the hon. and learned Gentleman puts this point. It is right that the matter out of which the 1927 Bill originally grew was the audit of 1920–1921, which subsequently was the subject of the House of Lords decision and then the Dore decision. Does not the hon. and learned Gentleman agree that I am right in saying that by amendment of the Bill as it went through Parliament the Government of the day enabled themselves to remit surcharges for the periods 1925–1926, 1926–1927 and 1927–1928, which was long after that time and long after the House of Lords decision?

    No, I do not accept that, and I shall give my references. If interventions are to be of this length, I shall have to decline to give way, put forward my propositions, sit down and invite the House to vote.

    The Attorney-General talked of defiance. How many right hon. and hon. Members have compared the different kinds of law breaking? In the Poplar case the argument was whether the councillors were breaking the law when they paid wages which were higher than the norm—and not all that much higher. They were relying on an Act which said that they could pay such wages as they thought fit. The question was how wide that discretion went. It was a difficult question of law. At all stages it was accepted that the people concerned did what they did in the belief that they were entitled to do so.

    This case is totally different. In this case, councillors refused to carry out the mandatory requirements of Parliament, refused to collect stipulated increases and refused to give benefits to the least-well-off members of the population. The second case is properly called defiance and the first is not.

    The Attorney-General said that the Bill was amended time and again to bring about further remissions. It was not. The proviso of which he spoke has nothing to do with the remission of penalties. It relates to disqualification. In the first instance, the Bill provided that nobody should be liable to disqualification in respect of something done before April 1927. That date was changed to 31st October because the passage of the Bill took longer than was expected and everyone agreed that it would be wrong to make a person liable to be disqualified in respect of an act done when he had no reason to suppose that it might attract that penalty.

    Section 2 (6), to which the Attorney-General referred, is limited specifically to the cases which had already been brought before the court. In relation to those cases there was a particular difficulty. Everyone, including the Minister, had thought until 14th February 1927 that even if the court declined to act in those cases the Minister could remit. It was decided that that belief shared by everyone was wrong. Therefore, the persons who had taken the course of referring the proceedings to the court in that belief found that they were denied one of the remedies which everyone thought they had, and something had to be done about it.

    Section 4 merely refers to the date upon which the remaining provisions of the Act came into force. According to the report with which the Attorney-General's officials have kindly supplied me, 31st October was introduced into Section 4 as well as Section 1 because the Labour Members of the Opposition said that the Act ought not to come into effect so early because there were still matters to be sorted out. The date of 31st October 1927 was chosen because Miss Lawrence informed the House that the Poplar council was having a meeting that night with a view to terminating the agreement it had with the trade union and getting the wages on to the right level. She said that to throw the agreement aside would cause resentment and that it would take three months to terminate it. The Conservative Minister said "So be it", and the time was extended until 31st October.

    The hon. and learned Gentleman can wag his head as much as he likes, but it is here in black and white. I invite him not to get so excited but to read it.

    The hon. and learned Member for Southport (Mr. Percival) has read the Act. Surely he cannot possibly deny the fact that the amendments which were made to Clause 4 on Report were amendments which saved the old law and thereby enabled the Minister to remit surcharges for 1926, and 1927—well after the House of Lords cases—of £17,000 in the case of Poplar for the first year and half of that sum for the second year because it covered only a half-year period. That was the intention, and that was, in fact, done.

    The Attorney-General is right to the extent that the effect of the amendment was exactly as I have described. The new provision did not come into effect in relation to any act done before that date. That meant that any surcharges, other than those which had been taken to court already and which are dealt with in Section 2(6), would remain to be dealt with under the law as it then stood. I would remind the Attorney-General that under the law as it then stood the only power of remission was contained in Section 4 of the Public Audit Act 1848. Under Section 4 of that Act the Minister could remit only if, in the circumstances, it was fair and equitable to do so. That was subject to review by the courts, as was made clear in the judgment in the case of Dore.

    What the Bill is doing here is quite different. We are taking all of this right out of the law and right out of the courts' supervision and relieving everybody, regardless of what they did.

    I want to make one other point on the question of precedents. The Attorney-General has said that the 1927 Act was the clearest precedent we could possibly have. I ask him to reconsider that in the light of what I am about to say. He said in Committee,
    "The purpose of the 1927 Act was to remit those surcharges which the Minster could not lawfully remit, as a result of the Dore case, by executive act, because there had been an appeal to the court in relation to such surcharges."—[Official Report, Standing Committee D, 15th April, 1975; c. 95.]
    It is so misleading. That was not the purpose of the Act at all. The purpose was to introduce a new penalty and a new safeguard for the public—namely, disqualification.

    When the Minister, in introducing the 1927 Act, referred to the question of surcharges which had already been referred to the court, he did so only towards the end of his speech, when, after having explained the purposes of the Bill, he said,
    "It only remains to consider what is to happen in the cases of surcharge which either are before the Courts or have been decided actually by a Court—the cases of Poplar, Bethnal Green and Woolwich I have already mentioned."—[Official Report, 15th June 1927; Vol. 207, c. 1033.]
    It is so misleading to say that the purpose of the Act was to remit these surcharges.

    I shall close with these further quotations which will show the House, in the words of the Minister in charge at the time, what the purpose of that Act was and the extent, if any, to which it was a precedent. Mr. Neville Chamberlain concluded his Second Reading speech in these words:
    "It must be clear that no member of a local authority who is doing his duty within the powers given to local authorities by Parliament has anything to fear from the operation of this Bill. The only people at whom this Bill is aimed are those people, if there be any such, who wish to go further than the law allows them, and who wish to set up a counter authority to Parliament."—[Official Report, 15th June 1927; Vol. 207, c. 1034.]

    6.15 p.m.

    No. Towards the end of his Third Reading speech, the Minister said this:

    "The fact is that, in practice, there will not arise any serious doubts in the future as to what is or is not likely to bring such a surcharge as would disqualify a member of a local authority from service for five years. I think no man who takes reasonable care, who understands his business and responsibilities, need be the least afraid of any dire consequences resulting from this Bill. No one who can show that his action was reasonable, or that, in his belief, it was justified, will be disqualified, and if he can show that he ought fairly to be excused, apart from the disqualification the surcharge itself will be remitted. On the other hand, those who cannot show either that their action was reasonable or that they thought they were acting in a justifiable manner, that is to say, those who must admit"
    —as all the councillors here must admit—"
    "that they were deliberately and intentionally acting in defiance of the law, cannot be fairly excused from the surcharge, and ought to be taken out of the local administration of this country."—[Official Report, 13th December 1927; Vol. 211, c. 2124–25.]
    The purpose of the 1927 Act was the exact opposite of the purpose of this Bill, which is to relieve these persons of the very consequences which the 1927 Act was intended to visit upon them, particularly in circumstances such as those which obtain here.

    No I shall not. It is deplorable that the Attorney-General should persist in relying upon such argument that the one Act is a precedent for the other. I invite the House to vote infavour of this new Clause.

    I shall detain the House for only one minute because I do not think that the hon. and learned Member for Southport (Mr. Percival) ought to try to get away with remarks such as he has made. Nobody said that the purpose of the 1927 Act was to remit surcharges. He has repeatedly said that as if we had put that argument forward. We did not say that. What we said was that the effect of that Act, by extending by amendment to the end of October—

    No, I shall not give way. The hon. and learned Gentleman would not give way to me. Why should I not return the compliment?

    I want to make it quite clear that the effect of the 1927 Act was that by an amendment made later there was a remission of surcharges to the end of October. That meant a remission of surcharges

    Division No.203.]

    AYES

    [6.18 p.m.

    Adley, RobertFraser, Rt. Hon. H. (Stafford & St)Lawson, Nigel
    Aitken, JonathanFreud, ClementLester, Jim (Beeston)
    Amery, Rt. Hon. JulianGalbraith, Hon. T. G. D.Lewis, Kenneth (Rutland)
    Arnold, TomGardner, Edward (S Fylde)Lloyd Ian
    Atkins, Rt. Hon. H. (Spelthorne)Gilmour, Rt. Hon. Ian (Chesham)Loveridge, John
    Awdry, DanielGilmour, Sir John (East Fife)McAdden, Sir Stephen
    Banks, RobertGlyn, Dr. AlanMcCrindle, Robert
    Beith, A. J.Godber, Rt. Hon. JosephMacfarlane, Neil
    Bennett, Sir Frederic (Torbay)Goodhart, PhilipMacGregor, John
    Benyon, W.Goodhew VictorMcNair-Wilson, M. (Newbury)
    Berry, Hon. AnthonyGoodlad AlastairMcNair-Wilson, P. (New Forest)
    Biffen, JohnGorst JohnMadel, David
    Biggs-Davison, JohnGow, Ian (Eastbourne)Marshall, Michael (Arundel)
    Body, RichardGower, Sir Raymond (Barry)Marten, Neil
    Boscawen, Hon. RobertGrant, Anthony (Harrow C.)Mather, Carol
    Bowden, A. (Brighton, Kemptown)Gray, HamishMaude, Angus
    Boyson, Dr. Rhodes (Brent)Griffiths, EldonMaxwell-Hyslop, Robin
    Braine, Sir BernardGrimond, Rt. Hon. J.Mayhew, Patrick
    Brittan, LeonGrist, IanMiller, Hal (Bromsgrove)
    Brotherton, MichaelGrylls, MichaelMiscampbell, Norman
    Bryan, Sir PaulHall, Sir JohnMoate, Roger
    Buck, AntonyHall-Davis, A. G. F.Molyneaux, James
    Budgen, NickHamilton, Michael (Salisbury)Monro, Hector
    Bulmar, EsmondHampson, Dr. KeithMontgomery, Fergus (Ludlow)
    Burden, F. A.Hannan, JohnMore, Jasper
    Butler, Adam (Bosworth)Harrison, Col. Sir Harwood (Eye)Morgan, Geraint
    Carlisle, MarkHarvie Anderson, Rt. Hon. MissMorgan-Giles, Rear-Admiral
    Carr, Rt. Hon. RobertHastings, StephenMorris, Michael (Northampton S.)
    Chalker, Mrs. LyndaHavers, Sir MichaelMorrison, Charles (Devizes)
    Churchill, W. S.Hayhoe, BarneyMorrison, Hon. Peter (Chester)
    Clark, Alan (Plymouth, Sutton)Heseltine, MichaelMudd, David
    Clark, William (Croydon S.)Hicks, RobertNeave, Airey
    Clarke, Kenneth (Rushcliffe)Higgins, Terence L.Nelson, Anthony
    Clegg, WalterHordern, PeterNeubert, Michael
    Cockcroft, JohnHowe, Rt. Hon. Sir GeoffreyNewton, Tony
    Cooke, Robert (Bristol W.)Howell, David (Guildford)Nott, John
    Cope, JohnHowells, Geraint (Cardigan)Onslow, Cranley
    Cordle, John H.Hunt, JohnOppenheim, Mrs. Sally
    Cormack, PatrickHurd, DouglasPage, Rt. Hon. R. Graham (Crosby)
    Costain, A. P.Hutchison, Michael ClarkPardoe, John
    Critchley, JulianIrvine, Bryant Godman (Rye)Parkinson, Cecil
    Crouch, DavidIrving, Charles (Cheltenham)Pattie, Geoffrey
    Crowder, F. P.James, DavidPenhaligon, David
    Davies, Rt. Hon. J. (Knutsford)Jenkin, Rt. Hon. P. (Wanst'd & W'df'd)Percival, Ian
    Dodsworth, GeoffreyJessel, TobyPeyton, Rt. Hon. John
    Douglas-Hamilton, Lord JamesJohnson Smith, G. (E Grinstead)Prior, Rt. Hon. James
    du Cann, Rt. Hon. EdwardJones, Arthur (Daventry)Raison, Timothy
    Durant, TonyJopling, MichaelRathbone, Tim
    Eden, Rt. Hon. Sir JohnJoseph, Rt. Hon. Sir KeithRees, Peter (Dover & Deal)
    Edwards, Nicholas (Pembroke)Kaberry, Sir DonaldRees-Davies, W. R.
    Elliott, Sir WilliamKellett-Bowman, Mrs. ElaineRenton, Rt. Hon. Sir D. (Hunts)
    Emery, PeterKershaw, AnthonyRidley, Hon. Nicholas
    Eyre, ReginaldKilfedder, JamesRidsdale, Julian
    Fairbairn, NicholasKing, Evelyn (South Dorset)Rifkind, Malcolm
    Fairgrieve, RussellKing, Tom (Bridgwater)Rodgers, Sir John (Sevenoaks)
    Fell, AnthonyKitson, Sir TimothyRoss, Stephen (Isle of Wight)
    Finsberg, GeoffreyKnight, Mrs. JillRossi, Hugh (Hornsey)
    Fisher, Sir NigelKnox, DavidRoyle, Sir Anthony
    Fletcher, Alex (Edinburgh N.)Lane, DavidSainsbury, Tim
    Fookes, Miss JanetLangford-Holt, Sir JohnSt. John-Stevas, Norman
    Fowler, Norman (Sutton C'f'd)Latham, Michael (Melton)Scott, Nicholas
    Fox, MarcusLawrence, IvanShaw, Giles (Pudsey)

    where the councillors had deliberately defied the law. It is a perfectly clear precedent. The hon. and learned Gentleman can try as much as he likes to twist the words here and there, but he cannot get away from the fact that that was a real precedent on the part of a Tory Government.

    Question put, That the clause be read a second time.

    The House divided: Ayes 232, Noes 243.

    Shelton, William (Streatham)Stewart, Ian (Hitchin)Wainwright, Richard (Colne V.)
    Shepherd, ColinStokes, JohnWakeham, John
    Shersby, MichaelStradling Thomas, J.Walker, Rt. Hon. P. (Worcester)
    Silvester, FredTapsell, PeterWall, Patrick
    Sims, RogerTaylor, R. (Croydon NW)Wallters, Dennis
    Sinclair, Sir GeorgeTaylor, Teddy (Cathcart)Warren, Kenneth
    Skeet, T. H. H.Tebbit, NormanWeatherill, Bernard
    Smith, Cyril (Rochdale)Temple-Morris, PeterWells, John
    Speed, KeithThatcher, Rt. Hon. MargaretWhitelaw, Rt. Hon. William
    Spence, JohnThomas, Rt. Hon. P. (Hendon S.)Wiggin, Jerry
    Spicer, Jim (W Dorset)Thorpe, Rt. Hon. Jeremy (N Devon)Winterton, Nicholas
    Spicer, Michael (S Worcester)Townsend, Cyril D.Young, Sir G. (Ealing, Action)
    Sproat, IainTrotter, Neville
    Stainton, KeithTugendhat, Christopher

    TELLERS FOR THE AYES:

    Stanbrook, Ivorvan Straubenzee, W. R.
    Stanley, JohnVaughan, Dr. GerardMr. Richard Luce and
    Steen, Anthony (Wavertree)Viggers, PeterMr. Spencer Le Marchant.

    NOES

    Archer, PeterEnnals, DavidMcElhone, Frank
    Armstrong, ErnestEvans, Gwynfor (Carmarthen)MacFarquhar, Roderick
    Ashley, JackEvans, Ioan (Aberdare)Mackenzie, Gregor
    Ashton, JoeEvans, John (Newton)Maclennan, Robert
    Atkins, Ronald (Preston N.)Ewing, Harry (Stirling)McMillan, Tom (Glasgow C.)
    Atkinson, NormanFaulds, AndrewMcNamara, Kevin
    Bagier, Gordon A. T.Fitt, Gerard (Belfast W.)Madden, Max
    Barnett, Guy (Greenwich)Flannery, MartinMahon, Simon
    Barnett, Rt. Hon. Joel (Heywood)Fletcher, Raymond (Ilkeston)Mallalieu, J. P. W.
    Bates, AlfFletcher, Ted (Darlington)Marks, Kenneth
    Bean, R. E.Foot, Rt. Hon. MichaelMarquand, David
    Bennett, Andrew (Stockport N.)Ford, BenMarshall, Dr. Edmund (Goole)
    Bishop, E. S.Forrester, JohnMarshall, Jim (Leicester S.)
    Blenkinsop, ArthurFowler, Gerald (The Wrekin)Mason, Rt. Hon. Roy
    Boardman, H.Fraser, John (Lambeth, N'w'd)Maynard, Miss Joan
    Booth, AlbertFreeson, ReginaldMeacher, Michael
    Bottomley, Rt. Hon. ArthurGarrett, John (Norwich S.)Mellish, Rt. Hon. Robert
    Bray, Dr. JeremyGarrett, W. E. (Wallsend)Mendelson, John
    Brown, Hugh D. (Provan)George, BruceMikardo, Ian
    Brown, Ronald (Hackney S.)Ginsburg, DavidMillan, Bruce
    Buchanan, RichardGolding, JohnMiller, Mrs. Millie (Ilford N.)
    Butler, Mrs. Joyce (Wood Green)Gould, BryanMitchell, R. C. (Solon, Itchen)
    Callaghan, Rt. Hon. J. (Cardiff SE)Gourley, HarryMolloy, William
    Callaghan, Jim (Middleton & P)Graham, TedMoonman, Eric
    Canavan, DennisGrant, John (Islington C.)Morris, Alfred (Wythenshawe)
    Cant, R. B.Grocott, BruceMorris, Charles R. (Openshaw)
    Carter, RayHamilton, James (Bothwell)Morris, Rt. Hon. J. (Aberavon)
    Carter-Jones, LewisHamilton, W. W. (Central Fife)Moyle, Roland
    Cartwright, JohnHarrison, Walter (Wakefield)Murray, Rt. Hon. Ronald King
    Castle, Rt. Hon. BarbaraHart, Rt. Hon. JudithNoble, Mike
    Cocks, Michael (Bristol S.)Hattersley, Rt. Hon. RoyOakes, Gordon
    Coleman, DonaldHatton, FrankO'Halloran, Michael
    Concannon, J. D.Healey, Rt. Hon. DenisO'Malley, Rt. Hon. Brian
    Conlan, BernardHeffer, Eric S.Orbach, Maurice
    Cook, Robin F. (Edin C.)Hooley, FrankOvenden, John
    Corbett, RobinHoram, JohnOwen, Dr. David
    Cox, Thomas (Tooting)Howell, Denis (B'ham, Sm H.)Palmer, Arthur
    Craigen, J. M. (Maryhill)Hughes, Rt. Hon. C. (Anglesey)Park, George
    Crosland, Rt. Hon. AnthonyHughes, Mark (Durham)Parry, Robert
    Cryer, BobHughes, Robert (Aberdeen N.)Peart, Rt. Hon. Fred
    Cunningham, G. (Islington S.)Hughes, Roy (Newport)Pendry, Tom
    Cunningham, Dr. J. (Whiteh)Hunter, AdamPhipps, Dr. Colin
    Davidson, ArthurJackson, Colin (Brighouse)Prentice, Rt. Hon. Reg
    Davies, Bryan (Enfield N.)Janner, GrevillePrescott, John
    Davies, Denzil (Llanelli)Jay, Rt. Hon. DouglasPrice, C. (Lewisham W.)
    Davis, Clinton (Hackney C.)Jenkins, Hugh (Putney)Radice, Giles
    Deakins, EricJohn, BrynmorRees, Rt. Hon. Merlyn (Leeds S.)
    Dean, Joseph (Leeds West)Jones, Alec (Rhondda)Richardson, Miss Jo
    de Freitas, Rt. Hon. Sir GeoffreyJones, Barry (East Flint)Roberts, Albert (Normanton)
    Delargy, HughKaufman, GeraldRobertson, John (Paisley)
    Dell, Rt. Hon. EdmundKerr, RussellRoderick, Caerwyn
    Doig, PeterKilroy-Silk, RobertRodgers, George (Chortey)
    Dormand, J. D.Lamborn, HarryRodgers, William (Stockton)
    Douglas-Mann, BruceLamond, JamesRooker, J. W.
    Duffy, A. E. P.Lawson, NigelRoper, John
    Dunn, James A.Leadbitter, TedRose, Paul B.
    Dunnett, JackLee, JohnRoss, Rt. Hon. W. (Kilmarnock)
    Dunwoody, Mrs. GwynethLestor, Miss Joan (Eton & Slough)Ryman, John
    Eadie, AlexLever, Rt. Hon. HaroldSandelson, Neville
    Edelman, MauriceLomas, KennethSedgemore, Brian
    Edge, GeoffLyon, Alexander (York)Selby, Harry
    Edwards, Robert (Wolv SE)Lyons, Edward (Bradford W)Shaw, Arnold (Ilford South)
    Ellis, John (Brigg & Scun)Mabon, Dr. J. DicksonSheldon, Robert (Ashton-u-Lyne)
    English, MichaelMcCartney, HughShore, Rt. Hon. Peter

    Short, Mrs. Renée (Wolv NE)Thomas, Jeffrey (Abertillery)Wellbeloved, James
    Silkin, Rt. Hon. John (Deptford)Thomas, Mike (Newcastle E.)White, James (Pollak)
    Silkin, Rt. Hon. S. C. (Dulwich)Thomas, Ron (Bristol NW)Whitehead, Phillip
    Sillars, JamesThorne, Stan (Preston South)Whitlock, William
    Silverman, JuliusTierney, SydneyWilley, Rt. Hon. Frederick
    Skinner, DennisTinn, JamesWilliams, Alan (Swansea W.)
    Small, WilliamTomlinson, JohnWilliams, Alan Lee (Hornch'ch)
    Smith, John (N Lanarkshire)Tomney, FrankWilliams, W. T. (Warrington)
    Snape, PeterTorney, TomWilson, Alexander (Hamilton)
    Spearing, NigelUrwin, T. W.Wilson, William (Coventry SE)
    Stallard, A. W.Varley, Rt. Hon. Eric G.Wise, Mrs. Audrey
    Stewart, Rt. Hon. M. (Fulham)Wainwright, Edwin (Dearne V.)Woof, Robert
    Stoddart, DavidWalker, Harold (Doncaster)Wrigglesworth, Ian
    Stott, RogerWalker, Terry (Kingswood)Young, David (Bolton E.)
    Strang, GavinWard, Michael
    Strauss, Rt. Hon. G. R.Watkins, David

    TELLERS FOR THE NOES:

    Summerskill, Hon. Dr. ShirleyWatkinson, JohnMiss Margaret Jackson and
    Swain, ThomasWeetch, KenMr. Joseph Harper.
    Taylor, Mrs. Ann (Bolton W.)Weitzman, David

    Question accordingly negatived.