Behind the Birmingham scandal

The housing grants fiasco offers lessons Labour cannot afford to ignore, warns Roy Hattersley

Most scandals are, by their nature, complicated. And local government scandals - real or imagined - are the most complicated of all. So, a stranger either to Birmingham or to housing improvement grants must be bewildered by the arcane allegations which have brought unwelcome publicity to my constituency. The leader of the Birmingham council - knowing both the city and the law - took the right decision and set up an independent inquiry. Labour headquarters has not acted so wisely. By suspending four local parties, it has at least given the impression that the appearance of tough action is more important than the reality of cleaning up an undoubted mess. That mess is only obliquely concerned with housing improvement grants.

The background to the accusations is easily explained. Aspirants to become the next Member of Parliament for Sparkbrook are accused of obtaining improvement grants for party members in return for their support when a candidate is selected. The allegations centre on two areas - Sparkhill, in my constituency of Sparkbrook, and Small Heath, which will be added to Sparkbrook before the next election. It is claimed that, in both those areas, most improvement grants went to party members. One of the more bizarre aspects of the whole affair is that the miscreants are not accused of breaking the law. Their "offence" is to use the law in a way which ensures the speediest possible receipt of a grant.

Birmingham has at least 47,000, and perhaps more than 100,000, properties that qualify for improvement grants. The cost of making them all habitable would be £340m for private property alone. This year, the Birmingham urban renewal budget was £38m - for both public and private housing. The problem of matching supply and demand is complicated by the latest variation in housing legislation. Anyone who applies for a grant - on a statutory form - must receive a response from the council within six months. The Government's object was to take the initiative for urban regeneration out of the hands of councils and their professional planners. The result was a free-for- all in which the self-confident, the articulate (and invariably the prosperous) went to the head of the queue and monopolised the scarce resources.

Reasonably, though dangerously, the Birmingham council attempted to bring some order into the chaos by asking grant applicants to fill in an "inquiry form" before they made an official application. The intention was ingenious and honourable. But it was bound to collapse as soon as tenants realised that the law itself offered them a faster route to a warm and dry house. The scheme was destroyed - at least in part - by the Sparkhill Ward Labour Party. But the suggestion that the destruction was part of a plot to make a Sparkhill councillor an MP is simply nonsense. The formal decision to ignore the council's queue was taken in 1992 - 18 months before I announced that I would not contest the next election. Councillors demonstrated against the Urban Renewal Department's "delaying tactics" almost two years ago. The local paper carried a picture of their protest. Sparkhill broke ranks with the rest of the city for reasons that the Labour Party inquiry needs to understand.

Sparkhill ward is one of those "difficult" local parties which are not willing to support the leadership - local or national - as a matter of principle. They have even been known to disagree with their Member of Parliament. Members believed that they were getting a raw deal from the council, and, rightly or wrongly, chose to do their best for their "own people". I have no idea what has been going on in Small Heath. But Sparkhill's drive for more grants has nothing to do with the ambition of local councillors. Of course, Labour Party members received improvement grants. Not surprisingly, some who delivered leaflets explaining how the "fast track" worked took that route themselves. But in Sparkhill, only 20 per cent of approved grants will go to party members. In Small Heath and in Ladywood, more than half the recipients had a party card.

The housing grants fiasco is only part of the problem and goes back to long before the last general election. I can recall standing on a Sparkhill street and being told that urban renewal money had been concentrated in Small Heath - in an attempt to secure the 1992 parliamentary nomination for one of the hopeful candidates. I have no idea whether that allegation was true. But Labour in Birmingham is still suffering from the problems of the way in which the Small Heath selection was conducted. Five years ago, knowing a little about the area, I proposed to the National Executive that the successful nominee should not be endorsed and the process started afresh. Only Tony Benn and Dennis Skinner supported me. It was the one time during my deputy leadership that the trio co-operated in concert. And we were right.

We were right because Small Heath - like Sparkbrook - is the home of thousands of families popularly described as "immigrants". Most are now British citizens and many were born here. But they remain a distinct, and generally disadvantaged, community. Increasingly, they want to play a part in making the decisions that shape their lives. A few are prepared to follow the lead of the old machine politicians. But most want to see the partnership of Britain and Islam respected and represented wherever power lies. That is why out of eight Sparkbrook Labour councillors, four are Muslim and one is a Sikh. It is also why, when I announced that I was leaving the House, I said that my successor should be from one of the communities which, although called "minorities", will soon make up a majority of Sparkbrook residents.

Muslims, despite their increasingly important role in British life, do not have a representative in Parliament. They want to remedy that omission. The battle for Sparkbrook was always going to be fierce. The National Executive must make sure that it is also fair. One of the problems of being a Muslim in Britain - probably poor, possibly unemployed and likely to have learnt English as a second language - is the difficulty of absorbing the subtleties of political life. Becoming a Labour candidate is a complicated business. And, for the initiated, it is easy to manipulate (as distinct from break) the rules in a way that provides an unreasonable advantage. That must not be allowed to happen when my successor is chosen. For the Muslims and Sikhs of Sparkbrook are, by their nature, the uninitiated.

Indeed, we need to do more than guarantee that the minorities will not be handicapped. When the National Executive drew up plans for increasing the number of women candidates, I asked for and obtained the promise that similar "affirmative action" would be introduced on behalf of ethnic minorities. Today, I have written to the general secretary asking him to reassure me that the promise will be kept. That would justify the inquiry and remove all suspicion that this strange exercise is simply intended to ensure that sitting members hang on to their seats.