I would like to preface my remarks by saying that it was only in 2002 that the Audit Commission told Walsall council effectively to find a new chief executive and other senior officials. At the time, the commission gave a damning picture of the services provided in the borough. Now, five years later, I am conducting a debate on the case of Mr. Peter Francis, who, in December last year, was awarded more than £650,000 in compensation by an employment tribunal in Birmingham. He brought a case against the council and at the last moment—I have to say that it really was the last moment—the council conceded and admitted liability for unfair dismissal and disability discrimination. Some money was undoubtedly spent by the local authority in trying to contest the case, but liability was admitted in the end.

I have no complaints about the compensation. In all the circumstances, some of which I will describe, I believe that the money is justified, but it will come, of course, from local taxpayers. As I understand it, there will be no money forthcoming from central Government. The question is simply this: why was Mr. Francis treated in such a shabby and unacceptable way? As a result of what happened to him, he has suffered—and continues to suffer—much ill health and much anxiety.

Then there is the question of the two reports into his case, neither of which will be published before the local elections. The first is by the district auditor, so the Government are involved through the Audit Commission, and we are told that it has been held up by delays in getting some individuals to comment. The district auditor’s report is not ready to be published. The second report, commissioned by the council itself, and conducted by Douglas Bradbury, a former chief executive of another authority, has actually been completed and sent to the council. The question remains why it is not being published. The response from the council is that the two reports will be published at the same time—but after the local elections.

That is amazing, is it not? We are talking about annual elections and there are arguments for and against them, but one of the main arguments in favour of them is that the electorate can make its decision accordingly. One factor is undoubtedly the performance of the council. As I say, both reports are not going to be published until after the election.

I received a letter today from the assistant chief constable of the west midlands. It is a rather serious letter in its content, as he tells me that current cases involving the council and arising out of the allegations made have been referred to the Crown Prosecution Service. We do not know the outcome, but clearly, the police and the CPS are now involved. It makes all these matters that much more serious.

Peter Francis was a civil servant for some 20 years. He started employment with Walsall council in June 1997. His first job was connected with the single regeneration budget, as he was the monetary officer. He was involved in the civil service as a manager in the employment service and he got promotion. In January 2004, given his background, he became the programme manager responsible for neighbourhood renewal funding, which at the time was worth about £11 million annually. That was when the trouble started for Mr. Francis.

As I am sure that my hon. Friend the Minister will confirm, that money was intended for the most disadvantaged neighbourhoods. When Mr. Francis became the programme manager, he found that that was not happening, and that some money was being used in areas that were not classified as such neighbourhoods. At one stage, he found that £4.5 million of the renewal fund could not be accounted for. I understand that some of that money, although nowhere near as much, continues to be unaccounted for. For all I know, that is why the police are involved.

Mr. Francis understandably raised his concerns with senior officials and the chief executive, Annie Shepperd. She was appointed in 2002, but she has now left the local authority and become the chief executive of a London borough. One would have imagined that in any organisation, whether in the public or private sector, a responsible official who was worried about such matters would receive support from senior officers. However, the very opposite happened. Mr. Francis says that rather than being listened to, with the matter investigated, he was looked on as the enemy within. Although I do not want to exaggerate, the situation reminds one to some extent of the situation in Westminster council when Lady Porter was its leader.

The atmosphere in Walsall council was, to say the least—I am putting this at its mildest—very unhelpful indeed. Mr. Francis found that that atmosphere caused him great concern and, unfortunately, much ill health. Several community organisations—I do not have time to read out the list—that had expected to receive renewal funding found that they did not receive the money. As a result, they are in some difficulty and have had to reduce services.

What led to the situation in which Mr. Francis had to bring his case before an employment tribunal? He found that his job was being restructured, which was a fine way of getting rid of him. He was told that the position that he had held would no longer remain in existence and that there was a new position for which he could apply, if he wished. There was certainly no enthusiasm for him to continue in the council’s employment. That led to him bringing a case for unfair dismissal and disability discrimination against the local authority. The employment tribunal then reached the conclusion that, given all the circumstances, he should be awarded a sum of more than £650,000.

At the moment, Mr. Francis suffers from depression and anxiety. He told me in a letter that he feels that his 30-year career in public service has come to an end—he is in his early 50s. Much, if not all, of the responsibility for that falls on what happened to him during his employment for Walsall council.

Councils are run by political parties. The Conservative party that runs the council must accept some responsibility for what has occurred. I am not at all sure that the Tories running the council have owned up in any way to the situation that I have been describing. The overall responsibility lies not with senior officers or the chief executive but with the political party; that is where it begins and ends.

I find the matter very unfortunate and I conclude with what I said at the beginning of my speech. The two important reports, by the district auditor and by Mr. Douglas Bradbury, are not being published before the local elections next Thursday, so the electorate will not be able to read them and come to a conclusion. I say to my hon. Friend the Minister that I hope, even at this late stage, with only a week to go, that at least one of the reports can be published. If the district auditor’s report cannot be published for the reasons that I have stated, the council should be asked—it cannot be instructed—to publish Mr. Bradbury’s independent report.

I am deeply grateful to my hon. Friend the Member for Walsall, North (Mr. Winnick) for allowing me to join in the debate. We are speaking because we feel a sense of intense frustration and anger. Those who, in my view, are clearly guilty have been surrounded by a ring of steel, preventing proper inquiry from being made and justice being done. I can think of few cases in my 34 years as a Member of Parliament that have filled me with such a sense of embarrassment at the disgrace and perversion of local government in Walsall.

Walsall was a failed authority. The Government rightly stepped in, booted out the senior officers, started teaching the councillors how to be councillors and imposed staff, including a chief executive. She is now, thankfully, over the Thames. Every time I look over I feel a sense of anger, but also delight and gratitude to Southwark for relieving us of somebody who was at the centre of a range of activities, supported by loyal associates.

I know Peter Francis very well, and my hon. Friend has rightly focused on what happened to him, but two other people were equally damaged, psychologically and physically, by what the local authority did to them. It is reprehensible, and the guilty have not been investigated and have so far escaped. The improvements in the council came at an unacceptably high price. The staff whom I know of—principally Peter Francis, David Parish, a former chief superintendent, and Liz McDonald—were intimidated, harassed and bullied. These were loyal staff. They did what they should have done as good local authority employees. When they saw that there was fraud, and misappropriation and misdirection of public funding, they went through the normal processes, to no avail. When one member of staff, believing that he was protected by law, blew the whistle, he continued to be hounded and was a broken man physically and emotionally.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Question put and agreed to.

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