Local Audit and Accountability Bill [HL]

Lord Wills Excerpts

Monday 24th June 2013 Grand Committee

Moved by

[Lord Wills]

17: After Clause 22, insert the following new Clause—
“Auditors right to documents and information of private contractors
(1) A local auditor has a right of access at all reasonable times to audit documents from private companies that the local authority have contracted services to during the last financial year.
(2) A local auditor must publish any audit documents, obtained under subsection (1), as part of a local audit publication.”

[Lord Wills]

My Lords, both this amendment and Amendment 18A, which is grouped with it, seek to improve transparency in these new arrangements for local government. Such transparency is key to greater accountability and therefore to better government and over and over again we have seen what damage can be done when transparency is smothered. The NHS has provided some tragic examples recently, as the Francis report into Mid Staffs and the Grant Thornton report for the Care Quality Commission have both shown.

The work carried out by private contractors for local authorities will often be of equal importance in the way that it involves issues of public safety, but it may also raise other issues of concern to the public such as corruption. The public should also have rights of access under the Freedom of Information Act to the work carried out by local auditors, because they are the ultimate clients of those auditors. Those auditors may be carrying out their tasks for a local authority, but that local authority serves the public.

The amendments are particularly necessary because the Localism Act envisages that a growing proportion of local authorities’ functions will be carried out for them by private companies under contract. If the authority carries out the work itself, then all information about that work is subject to the Act and subject, of course, to the exemptions in the Act. But the public’s right to information is less straightforward when the work is done by a private contractor. Section 1 of the Freedom of Information Act establishes that the right of access is to information which a public authority holds. Section 3(2)(b) of the Act provides that information which another person holds on behalf of the authority is treated as held by the authority itself.

However, how much of the information a contractor holds about the contract is held on behalf of an authority? The answer is not self-evident. The contract itself may specify that particular information is to be treated as held on behalf of that authority or it may say a specified type of information must be provided to the authority if it asks for it, to help it answer an FOI request. But what if such a provision applies only to a very limited class of information? The effect may be to exclude the public from access to any information which is not specifically mentioned. The amendments will help, I think, to overcome any such oversights.

--- Later in debate ---

[Lord Wills]

First, I am very grateful to the Minister for that response and for the offer to talk to the Government. I will be very happy to take it up. He is not right that I am not entirely satisfied with his response; I am not at all satisfied with his response. Indeed, I find myself rather saddened by this resiling from the fundamental principle of the importance of transparency. It is in the coalition agreement that the coalition Government are committed to greater transparency. After all the evidence we have seen from the NHS in recent months, I would have thought that the Government would have been persuaded of the importance of that commitment but, sadly, we have the same old excuses that are always trotted out when freedom of information and greater transparency are proposed.

For all that the Minister says that local authorities should be able to provide all the information needed under freedom of information, he did not address the specific examples that I gave to show why there may be cases where the current provision is not adequate in which people will not be able to gain access to the information to which they are entitled. I hope that when he and his officials read Hansard, they will look at that again before we meet so that we can examine this particular case because existing provision is not adequate and neither is the provision in this Bill.

On the question of audit fees, again I had hoped that I would have pre-empted some of these arguments but it is, I have to say, pathetic for the Government to accept this argument. This is an argument for a steady withdrawal of transparency from the public in terms of local government as more and more services are contracted out, as the Government wish, rightly or wrongly, because that is envisaged in the Localism Act. There was a lot of discussion of it when that Bill was going through. As that happens, there will, according to the argument just advanced by the Minister, be decreasing transparency. That stands to reason. The provisions in this Bill are not adequate for that, so I am very disappointed.

Finally, I shall withdraw the amendment for the time being, subject to further discussions with the Minister and officials, but I ask Ministers to reflect on this. There will be abuses of power in local government. Wherever power resides, whether in local government or anywhere else, such as in the National Health Service or in central government, power is abused. Nearly always, greater transparency and freedom of information are the key to preventing, or at least mitigating, the effect of such abuses of power. We have seen it over and over again. So at some point in the future, unless changes are made to the Bill, this Government will be in the dock for having had the opportunity to increase transparency and having refused to do so. The consequences will then be visited, perhaps on some future Government, and some hapless Minister will have to stand up, as we have just seen Health Ministers do twice in the past few months, and apologise to all those who tried to get the information and were denied it and will then have to take remedial measures. Ministers have a chance to do something now before further damage is done. I hope they will think again.

[Lord McKenzie of Luton]

Before my noble friend withdraws his amendment, will the Minister clarify something? I think part of his answer was that all the transparency that is needed is provided for in the Bill and the regime that we are discussing. In that case, why is there concern about additional audit fees? What extra transparency is being forgone to keep those audit fees down if they would rise if my noble friend’s amendment is pursued?

[Lord Wallace of Saltaire]

I take the noble Lord’s cynicism about it always being a question of costs, although costs are not entirely a negligible issue at the moment for any of us. We had better pursue through further discussions the particular examples that the noble Lord raised and the question of how far into the internal workings of private contractors one needs to go to be sure that one is getting the value for money and service that one really requires.

[Lord Wills]

I am very grateful. My noble friend reinforces the point about the pathetic nature of the Government in accepting these arguments about increased audit fees. They really need not be there. These auditors are getting access to a very lucrative new stream of work and they should pay the price to the public in making information available.

[Lord Beecham]

Before my noble friend withdraws the amendment, what is the present position when a contract is let by the local authority for a particular service in terms of the audit? What is the relationship of the district auditor to a council-commissioned contract in relation to its own service? Does he have access and is he subject to the same disclosure requirements that my noble friend seeks as if the council itself were directly providing that service?

[Lord Wallace of Saltaire]

My clear understanding is that auditors do have access to the relevant accounts of the contractor, but that would probably differ a great deal from one contract to another. I therefore need to make sure that in saying that they have access I am talking about all the cases rather than some. It may well be that a number of contracts differ one from the other.

[Lord Wills]

Again, I am grateful to my noble friend, who has made an important point. We will return to these issues in private discussion and I hope that I can persuade the Government that they need to be a little more robust in responding to the consultations. They often are, but not in this particular case. In the mean time, I beg leave to withdraw the amendment

Amendment 17 withdrawn.