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One of the principles of conduct in public life includes the requirement not to "seek benefit for yourself, family, friends or close associates".  It is therefore reasonable to expect a councillor to declare an interest in any decision that affects friends or neighbours and to refrain from voting or seeking to influence the decision for personal reasons.  There are, though, only very limited sanctions for any breach of the principle that falls short of criminal behaviour.  The council's decision could be challenged if it was decided by councillors having a personal interest.
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