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Council House Sales (East Lothian)

Volume 25: debated on Wednesday 16 June 1982

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

Motion made, and Question proposed, That this House do now adjourn.— [Mr. Goodlad.]

1.18 am

I am grateful for this opportunity to raise an issue which concerns my constituency and which involves an important precedent in the use of the powers of the Secretary of State for Scotland. I hope that the Under-Secretary of State has taken advantage of the hours which he has spent waiting for this debate to reflect on the implications of the contempt which his right hon. Friend has shown for the findings of the public inquiry which was held in Haddington earlier this year.

I should explain, for the sake of clarity, that the subject which I am raising is the rejection by the Secretary of State for Scotland of the findings of the public inquiry held into the conduct of council house sales in East Lothian. That is a narrower point than
"council house sales in East Lothian",
the title of the debate on the Order Paper for the sake of brevity.

I should be happy to have a broad debate about housing policy if there were time. The Minister knows that, whereas I am principally concerned about the housing needs of the 2,000 people of the East Lothian district who are on the council waiting list, he is, as I recognise, principally concerned with the aspirations of those who want to buy their own homes. There is no fundamental difference between us on those matters. For the sake of the debate we may as well agree to differ about which of those two aspects should be given priority.

The sequence of events which led to the incident that I want the Minister to explain started in 1980, when the Government used, as usual, their English parliamentary majority to enact the Tenants' Rights, Etc. (Scotland) Act 1980. That Act, among other things, gave council tenants the right to buy their homes at a substantial discount, regardless of the consequences to people waiting for houses to rent. The Act came into force on 1 October 1980.

East Lothian district council made it clear from the outset that, while it was profoundly concerned about the impact of the legislation on its ability to fulfil its duty to provide for the housing needs of the district, it did not intend to break the law. However, it emerged that, just as the basic principle of the law is questionable, the legislation created unforeseen practical problems. The statute requires, among other things, that councils should make it possible to complete the conveyancing of houses within two months.

Even in ideal circumstances it would be extremely difficult to complete property transactions in such a short time. Such transactions involve administrative and legal work, valuation, site inspection and the preparation of a proper deed plan. It would, I suppose, have been possible to conclude the sales in a quick, cheap and nasty fashion, but that would have left a chaotic legacy of disputed boundaries and inadequate title deeds. East Lothian district council prefers to do its work properly.

A small district council trying to contain its staffing costs was bound to run into administrative delays with an initial rush of 230 applications to buy council houses. A backlog accumulated and the district council, far from dragging its feet, as the Scottish Office has suggested, decided to recruit more administrative staff to help with the extra work that had been imposed by the Government.

The Conservative group on the council opposed those staff appointments and suggested that the sales should be processed by the Lands Tribunal instead of the district council. Acceptance.of that advice would have obstructed the right to buy, and happily the Labour group on the council rejected the suggestion and two extra staff were appointed in August 1981.

The council then began to make headway in clearing the backlog of applications to buy. Delays were being reduced and it seemed likely that applications would be dealt with up to date by the end of the summer. I hope that I have made it clear that we are not discussing an obstructive or bloody minded district council. East Lothian district council is, on the contrary, an eminently reasonable and diligent local authority which, although naturally concerned about the Government's housing policy nevertheless intended to obey the spirit of the law.

In those circumstances, many of us were genuinely astonished when the Secretary of State for Scotland ordered a public inquiry into the progress of council house sales in East Lothian on 17 December 1981. While being suspicious of his motive, I feared that he was about to indulge in another example of his well-known spite towards Scottish local authorities, particularly those controlled by the Labour Party.

When I gave evidence to the inquiry on 25 January 1982 I said:
"The Secretary of State for Scotland is the combined legislator, judge, jury and executioner in this case."
I also described the Secretary of State's intervention as a politically inspired publicity stunt. His subsequent actions have given us all proof positive that what I said was right on both counts.

The reporter took evidence for two days and sent his findings to the Scottish Office on 11 March. He summarised the evidence and drew a number of conclusions. I should like to highlight five key points in his report.

First, the reporter established that the council genuinely intended to carry out the spirit of the law. He pointed out that it had even appointed extra staff to ensure that that could be done. Secondly, he found that the law had a number of shortcomings that had led to genuine difficulties for district councils, particularly in checking old tenancy records, which sometimes do not exist, to calculate the discounts to which tenants were entitled.

Thirdly, the reporter specifically stated and confirmed that section 2(2) of the 1980 Act, which directs councils to complete sales within two months, is directory and not mandatory. Fourthly, he concluded that there was no evidence either than tenants had complained about delays or that the interests of tenants whose applications to buy had been delayed had been prejudiced.

Fifthly, I should like to quote in full the final paragraph of the reporter's recommendations:
"The absence of complaint from any applicant, or other member of the public, or indeed from any member of East Lothian District Council who disagreed with what the majority of Councillors were causing the Council to do, suggests that what East Lothian District Council did was reasonable.
I have reached the conclusion that East Lothian District Council did not fail to make provision for the progression of applications in terms of section 7(1) of the Tenants' Rights, Etc. (Scotland) Act 1980. In these circumstances I would respectfully recommend that there is no necessity to proceed further in the matter under section 211(2) of the Local Government (Scotland) Act 1973."
One might have expected that to be the end of the matter, but, like any playground bully, the Secretary of State does not like losing his little games and he decided to take advantage of the "heads I win, tails you lose" section in the 1973 Act. On the basis of a characteristically cynical interpretation of section 211(2), the Secretary of State announced that he was ignoring the findings of the inquiry and had made a default order against the district council.

It is worth mentioning that the right hon. Gentleman took 10 weeks to digest the reporter's embarrassing 10-page report, but the default order requires the district council to complete the sale of about 120 houses in eight weeks, regardless of the extra costs and of the fact that the backlog would have been cleared anyway by the end of the summer. If there were ever any doubt about that, it was dispelled when it came to light that only one tenant lodged a new application to buy during June this year.

However, the Secretary of State was not content with an unjust default order. He has also decided to add insult to injury by ordering the council to pay, with its ratepayers' money, the cost of the inquiry which had exonerated it. That manifestly unjust action has caused considerable dismay in many quarters. Apart from opposition to his action from members of the Labour Party, the Tory councillor for East Lothian is reported in the district council minutes as having said recently:
"the Secretary of State has erred on the side of being punitive".
The Conservative councillor for North Berwick voted with the Labour group in favour of exploring ways of resisting the action taken by the Secretary of State and two of his Conservative collegues on the council abstained in that vote.

Since then the council has decided not to waste any further time or money in pursuing the Secretary of State in the Court of Session. Will the Minister explain the sheer pettiness of his handling of the case now? He has already confirmed in a written reply to me on 28 May that his action in setting aside the reporter's recommendations is unprecedented. I realise that the Secretary of State wished to pillory this small Labour-controlled district council and that the reporter did not give him the findings that he required for the purpose.

However, there is a possibility that the reporter was right. After all, he conducted the inquiry and heard all the evidence. If the Secretary of State had decided to proceed against the district council regardless of the facts, why did he waste many people's time and much money by holding a farcical public inquiry to which he did not intend to pay attention? I realise that section 211 of the 1973 Act does not specifically require the Secretary of State for Scotland to take account of the findings of an inquiry, but a sensible interpretation of that section would lead one to the conclusion that there should at least be some relationship between the findings of an inquiry and the ultimate disposal of the case. If not, there would be no point in conducting public inquiries.

This has been a thoroughly squalid affair which shows the Secretary of State in an extremely bad light. As the playground bully, he changes the rules if he is losing the game. If he wishes to emerge from this episode with any dignity, he should at best take this opportunity to apologise for his absurd conduct and, at the very least, he should spare the ratepayers of East Lothian from the burden of the costs of an unnecessary public inquiry that has served to confirm only that the council had no case to answer in respect of this legislation or anything else.

1.32 am

The House has reason to be grateful to the hon. Member for Berwick and East Lothian (Mr. Home Robertson) for raising the question of council house sales in East Lothian, because a fundamental principle is at stake. I entirely accept his definition of this Adjournment debate. He has not tried to make it a general debate about council house sales in East Lothian; he has spoken about the default order. The general issue is respect for the wishes of Parliament, which goes to the heart of our system of government.

The Government's performance is not under scrutiny in this debate. We are scrutinising the performance of East Lothian district council. Had it not failed to implement the law as passed by Parliament, no intervention by my right hon. Friend the Secretary of State would have been necessary. By the same token, the district council's decision on 7 June to obey the default order should bring contention to an end.

Before I turn to the specific points raised by the hon. Gentleman, may I remind the House that in making the default order my right hon. Friend the Secretary of State acted under the powers conferred on him by section 211 of the 1973 Act. The use of those powers is a solemn matter bearing on the fundamental question whether local authorities are complying with the duties laid upon them by an Act of Parliament. No doubt because of that solemnity, Parliament provided that the powers were not to be exercised until there had been a local inquiry to investigate all the evidence.

My right hon. Friend takes the solemnity of the function seriously and he acted after scrupulous consideration of the evidence provided by the public inquiry. That brings me to one of the specific points of the hon. Member for Berwick and East Lothian. He said that my right hon. Friend the Secretary of State took two months to reach a decision. I entirely reject as a ground for criticism the fact that the process of consideration took that time. On the contrary, it is the clearest possible demonstration of the great care that the Secretary of State took in weighing the detailed evidence that was presented to the public local inquiry before reaching his decision to make a default order.

As the hon. Gentleman said, it is satisfactory that East Lothian has decided to implement the Secretary of State's decision. I understand that it took counsel's advice, which was against taking any action. I am confident that the district council's action will close the matter. I hope that the House will not need to debate council house sales in East Lothian again.

I am grateful to the hon. Gentleman for giving way. He said that his right hon. Friend the Secretary of State gave the matter scrupulous consideration for a long time, but he then stood the report of the public inquiry on its head. Is he implying that the reporter conducted the inquiry badly or did not subject it to the same scrupulous consideration?

If the hon. Gentleman will wait, I am coming to the facts, figures and arguments that formed the basis of my right hon. Friend's decision.

The hon. Gentleman's intervention, and much of his speech, related to the fact that in making the default order my right hon. Friend overturned the recommendation of the reporter whom he had appointed. There is nothing irregular about that. The business of the reporter is to investigate and report. He does not have the status of a judge.

Section 211 of the 1973 Act makes it absolutely clear that the decision whether to make a default order following a public local inquiry lies with the Secretary of State. The inquiry's purpose is to gather and review the evidence and to give the local authority the chance to make points that concern it. That is clearly illustrated by the fact that in the other two public inquiries under section 211 the learned reporter submitted reports that did not contain recommendations.

Ultimately, the Secretary of State's actions must be determined by his own judgment of whether, on the evidence that is available, the local authority has failed to carry out its statutory duties. It would be wholly wrong for a Secretary of State to fail to act if he concluded that default existed. Having reached that conclusion in relation to East Lothian, my right hon. Friend could not reasonably take any other course than to lay a default order.

Before I proceed to some of the points of detail, it is important to stress that the reasons for my right hon. Friend's decisions were set out at length in the six-page letter that was sent by the Department to the district council. I understand that a copy was also sent to the hon. Member for Berwick and East Lothian. In the light of this debate, I have instructed that additional copies, together with the default orders and the reporter's report, be placed in the Library so that hon. Members who consult them in future will be able to weigh for themselves the thoroughness with which my right hon. Friend's decision has been publicly accounted for.

As the letter explaining the decision shows, my right hon. Friend went back to the evidence of the inquiry. All the factors leading to his decision are clearly founded on that evidence. I shall now deal with it.

The process of investigating possible default is not embarked upon lightly. It is a step which has been taken only twice previously under the 1973 Act. In the case of East Lothian, no formal steps were taken until a full year after the Tenants' Rights, Etc. (Scotland) Act came into effect. Informal monitoring of all local authorities by the Scottish Office suggested that at the end of September 1981 East Lothian had the worst record of all Scottish authorities in processing sales applications, and the decision was taken to require formal evidence from the council about its performance.

That evidence showed that in the 13 months since the Act had come into effect East Lothian had issued only 88 offers to sell, including some by the Lands Tribunal, despite having received 587 applications to purchase. It showed that tenants who had applied to buy in the first few days of the Act's operation were still waiting for an offer to sell despite the time limit of three months laid down in the Act.

On the basis of the information supplied by East Lothian, which included minutes of meetings showing repeated warnings to councillors by officials that the requirements of the Act were not being met, there could be no shadow of doubt that there was strong evidence pointing towards default. Consequently, my right hon. Friend took the step of holding a public local inquiry. That inquiry was duly held and the report was received.

The central fact to emerge from the evidence is that at the time of the inquiry, 16 months after the Act came into operation, 229 tenants had not received an offer to sell within the time limit set down in the Act. Of these, 24 applications had been submitted one year previously and a further 99 had been submitted between nine months and one year previously.

The hon. Gentleman suggested that East Lothian was in no way obstructive, but the Secretary of State had to take account of other facts. Looking further back, in the first six months of the Act's operation, the council had not issued a single offer to sell, although it had received more than 70 applications in the first week and it was required by the Act to serve those tenants with offers to sell within three months. That was hardly indicative of a well-intentioned authority swimming against the tide of an unexpected work load. It was evidence of complacent disregard by the authority of its statutory duties.

I am trying to answer as many of the hon. Gentleman's questions as I can in the limited time available. If I get through in time, I will gladly give way to the hon. Gentleman in the last minute or two.

The hon. Gentleman referred to the point of legal argument to which the learned reporter gave considerable weight but which my right hon. Friend found irrelevant. As the hon. Gentleman raised the matter, it is important that I should give a brief explanation. The reporter expressed the view that the time limits set by the Tenants' Rights, Etc. (Scotland) Act on various steps in the sale process were directory rather than mandatory and he referred to a number of cases in support of that conclusion. My right hon. Friend considers, however, that that precise legal point was simply not relevant, as default can arise whether time limits are directory or mandatory.

The hon. Gentleman also referred to the costs of the inquiry. The question of charging the Secretary of State's expenses relating to the public local inquiry against the council is largely dictated by statute. Section 210(7) of the 1973 Act specifically directs that as a general rule the Secretary of State's expenses are borne by the local authority which is the subject of the inquiry. It allows the Secretary of State to bear all or part of the expenses himself, if he sees reason for so doing, but I find it hard to see what reason the Secretary of State could have found for not following the general direction of the statute in a case in which he had found it necessary to make a default order. The expenses of the other two public inquiries—Dundee and Stirling—held under section 211 of the 1973 Act were charged to the local authorities concerned and neither raised any objection.

The default order allowed the council until 20 July to deal with all applications received before 13 April of this year. That would be about 200 applications. The hon. Gentleman criticised that timetable. The council will have had a minimum of three months and one week to deal with those applications compared with the two months allowed in normal circumstances by the Act.

Assuming that the council had done no work on the applications at the date of the default order, it still had eight weeks at that stage, virtually the same period allowed by the Act, for new applications. The fact that the council delayed giving the necessary instructions to its officials until 7 June reduced the period to six weeks. That is the council's responsibility. The timetable is strict, but it is no harsher than that imposed last year on Stirling district council on broadly a similar number of cases.

We must remember the interests of tenants. A number of tenants have already been waiting for a year—more than four times the period within which they had a legal right to receive offers. It would be wholly unjustified to prolong their wait for a day longer than necessary.

The hon. Gentleman referred to the time taken by the district valuer. On the evidence submitted, we could find no proof that East Lothian's backlog of delays had been caused by the district valuer. Only nine problem cases were referred to in evidence, and no claim was made that there were more. The important point is that in the majority of cases the district valuer's advice seems to have been acceptable and came in quicker than the district council issued offers to sell.

Looking to the future, I am happy to be able to tell the House that I understand that the chief valuer is confident that no difficulties will arise. Any failure to meet the new timetable will be wholly the responsibility of the district council.

The hon. Gentleman also referred to delays caused by the need to check tenancy records. Although it is possible to make this sound extremely complex, in fact it arose in only a small number of cases and the Act is clear. A tenant is obliged to make a legally binding statement and the district council has the power to refuse an application which it has reason to believe contains incorrect information.

East Lothian council had no right to delay indefinitely on that basis. The facts are that East Lothian, on the basis of the evidence, was clearly in default of its statutory obligations. The Secretary of State acted to defend the rights of tenants. Default actions are always regrettable, but the law must be upheld. The Tenants' Rights, Etc. (Scotland) Act 1980 was passed by Parliament and the Secretary of State was acting in the interests—

The Question having been proposed after Ten o'clock and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at twelve minutes to Two o'clock.