Housing Associations and Public Contractors: Freedom of Information

Chloe Smith Excerpts

Wednesday 6th March 2019 Westminster Hall

[The Parliamentary Secretary, Cabinet Office (Chloe Smith)]

It is a pleasure to serve under your chairmanship, Mr Betts, and I thank you for that reminder. I thank the hon. Member for Hammersmith (Andy Slaughter) for his points. I know that his thoughtful presentation follows on from the work on his private Member’s Bill. I also thank the hon. Member for Cambridge (Daniel Zeichner). As he noted, we have looked in some detail at an issue regarding one particular examination board, but if he will forgive me, this afternoon I will focus on responding to the more general points that have been raised.

Freedom of information is, of course, one of the pillars on which open government operates. The Government are committed to supporting the effective operation of the Freedom of Information Act 2000. That Act has been in operation for more than 10 years. It received post-legislative scrutiny by the Justice Committee in 2012, and it was reviewed by the Independent Commission on Freedom of Information in 2016. One of the key questions raised by the hon. Member for Hammersmith is whether the time is right for an overall review of the Act, and I point him towards that work from 2016. It considered whether the Act still ensures an appropriate balance between transparency and the need for a private space—for example for advice and discussion—as well as whether the costs of freedom of information are proportionate to its many benefits.

The Government welcomed the commission’s focus on enhancing transparency, which went a little wider than just the 2000 Act. The Information Commissioner’s Office has added an important piece of research to the scrutiny of that Act with its recent report, and I am grateful to the commission and the commissioner for their work on a significant and complex matter. I will respond to that report shortly—I am sure hon. Members look forward to having that response on their bedside tables, just as they did the report itself.

As the Information Commissioner identified in her report, since the passage of the Freedom of Information Act, the UK has been at the forefront of opening up data to allow the public and press to hold public bodies to account. The Government are among the most open and transparent in the world and remain committed to the principles of transparency and openness. We launched updated transparency principles in 2017 and it is a fact that we are publishing more data than ever. We will continue to support the effective operation of the Act as part of that.

On the question of how housing associations ought to be dealt with, we fully share the view that landlords, including housing associations, should be accountable and transparent in their dealings with tenants, and should be responsive to their needs. I am not necessarily persuaded, however, that the extension of FOI to housing associations is the sole best means of achieving that. As landlords, housing associations are private sector bodies that deliver a social benefit, rather than exercising

“functions of a public nature”

or providing public functions under contract on behalf of a public authority, as the Act says. It is important to maintain that distinction; I do not think the analogy is as simple as the second key question of the hon. Member for Hammersmith suggests.

If any Government were deemed to exercise too much control over private bodies, there would be a significant risk that they could be classified as public sector bodies. That would mean that, in this case, their private debt of about £70 billion would be added to the Government’s debt burden—the public’s debt burden. Housing associations would also be subject to public sector borrowing constraints, which would limit their ability to finance the development of new social and affordable homes. I note that housing associations deliver 93% of all new affordable homes, so it is not a small matter.

In terms of accountability, the vast majority of housing associations are voluntarily registered with the regulator of social housing and if they seek public funding, they must be registered and subject to that regime. That means that they have a duty to comply with the standards set by that regulator, including making information available to tenants about the running of the organisation. The key point is that last summer, the Government announced a review of social housing regulation that will look at how transparency and accountability for tenants can be further improved, including better access to landlord information.

As with every hon. Member, I add to the record my sympathy and personal anguish at the tragedy at Grenfell Tower. As the hon. Member for City of Chester (Christian Matheson) acknowledged, the inquiry is looking at some of the issues, including communications with residents, which specifically covers whether there was a formal system for recording concerns, what concerns were raised at the time or after the recent renovations, how and to whom any such concerns were expressed, and what was done in response.

[Andy Slaughter]

I gently say to the Minister that there are two weaknesses in her argument. First, disclosing information voluntarily, however laudable the aim or honestly done, is not the same as giving citizens the power to interrogate an organisation. Secondly, if the Minister is right—I think it was the policy of a previous Conservative Government to put the onus on housing associations, rather than councils, to deliver the lion’s share of social housing—and they are standing in the shoes of councils, there is all the more reason for them to be accountable in that way. If Scotland and other charities can do it, why does the Minister appear to envisage the risk of a housing association suddenly being classed as a public body, just because it is subject to FOI?

[Chloe Smith]

I thank the hon. Gentleman for those points and for the way he has put his arguments. I am simply saying that such issues should be considered through the review.

I am also grateful for the points added by the hon. Member for Edinburgh East (Tommy Sheppard), to whom I wish a happy birthday. I add two points in relation to the situation in Scotland. First, we are looking to see the record that will develop there. As I understand it, the provisions have not yet come into force, so we will look at how effective they are in increasing transparency. Secondly, as the hon. Member for Edinburgh East mentioned, the Scottish Government laid the planning for the consultation on these matters in 2016 and began it in 2017, so it is not a short process. I would like to think that all hon. Members present recognise that the provisions of the 2000 Act mean that such things are not necessarily quick, simple or short. I will come on a little later to how the Act may be used to extend the scope, if desired.

On contractors—the other half of the case made by the hon. Member for Hammersmith—I remind hon. Members of the arguments made by my right hon. Friend the Minister for the Cabinet Office last year about why we as a Government use outsourcing. I say “we”, but successive Governments have used it. I will use his arguments as context in response to the contextual points that have been made today. As the hon. Member for City of Chester said, we may have philosophical differences, but this is why one would look at outsourcing as a benefit to the public.

As the Minister for the Cabinet Office said,

“you can have both good and bad in both the private and the public sectors”,

as we all know from what we get in our constituency mailbags every week. He continued to say that

“what matters is that the service works for the people who use it in their everyday needs”

and that it provides

“value for money for the taxpayer.”

It is the case that

“the private sector has a vital role to play in delivering public services,”

and the Government continue to support that position, as have successive Governments since at least the 1980s, as I said.

As my right hon. Friend said, outsourcing can deliver “economies of scale” that can mean greatly better value and lower costs for the taxpayer. It is also the case that

“open and fair competition…encourages creativity and innovation”

that simply would not otherwise come about. Again, that benefits the user of that public service. The private sector can also bring

“a range of specialist skills, world-class expertise and deeper knowledge to bear on what can be complex issues.”

His argument is really that the Government

“cannot do everything by itself”,

and should not, because

“It needs the…innovation that only a…marketplace of suppliers can provide.”

In another speech last year on the subject, my right hon. Friend made the argument that small businesses and the third sector have a great appetite for taking part in providing those public services, and for a good reason. In many ways, they are often “closest to our communities” and are

“in the best…position to deliver social value”

through those contracts. That is an important further argument to think about when we look at outsourcing.

Because the Government remain committed to supporting that position, we are sceptical about the introduction of additional reporting burdens on those small organisations. We think that it would weaken the resilience of the delivery for the taxpayer, reduce the value for money that the Government can deliver for the taxpayer, and affect the support that the Government can give indirectly to those jobs when we use such suppliers.

In respect of contractors, the Government have certainly considered how best to balance the competing interests of transparency and burdens. As I have said, we recognise the importance of transparency in how public money is spent, but we are concerned about a disproportionate burden, because we do not want to discourage smaller organisations from serving the public.

[Andy Slaughter]

I am listening to the Minister’s argument, but again, I thought I had dealt with that point in my speech. The majority of inquiries will be about the major contractors that take the lion’s share. I entirely take her point about small contractors, but my Bill would put the onus and the responsibility for the cost on the public authority to do that, so there is a way round it.

--- Later in debate ---

[Chloe Smith]

I am grateful to the hon. Gentleman for that clarification, and before I finish today I will talk briefly about that relationship between a contractor and the supplier, which is relevant to the proposal.

I will make one further general observation about the position of contractors; actually, I think the hon. Gentleman made it himself in his remarks. Of course, the Act exempts all organisations from providing information in certain ways, for example on grounds of commercial confidentiality. There are other exemptions as well. Extending freedom of information to another category of organisation does not necessarily change that fact, which is set out in the Act. I do not think the case can be made that extending freedom of information would have prevented supplier failure, of which some examples have been given this afternoon.

Let me move on to what is already done to provide information, because it is important to assess where we are working from. It is already policy for Departments to publish information during and after the awarding of a contract, with the exception of information that is commercially confidential, as I have said. That information includes a range of details. The Government’s model services contract includes clauses that reinforce that increased transparency.

The Government are now going even further and we will publish information about how our most important contracts are performing against their contractual targets. That will, of course, hold both Government and our suppliers to account. As well as increasing transparency for citizens to monitor outcomes, we think that this change will drive behaviour and improvements in delivery where they are needed. In addition, Departments are now required to publish their own commercial pipelines twice yearly, which is important to the public.

Since the Information Commissioner first published a report on this subject in 2015, the Government have introduced a range of measures to increase transparency. No doubt hon. Members have made use of the Contracts Finder website, where data can be found, and data.gov.uk, where details on spend can be found. In 2016, the transparency principles were also introduced, which make it clear to suppliers what information from bids will be released, and that any genuinely sensitive information should be highlighted with procuring Departments. That all ensures that citizens can see a clear public record of how Government money is spent on public contracts, and with what results.

I said I would turn to where information is held between the public authority and the contractor. Again, the Independent Commission on Freedom of Information looked at the issue of private contractors providing public services. First, it concluded that

“extending the Act directly to private companies…would be burdensome and unnecessary.”

However, it went on to say that

“information concerning the performance or delivery…should be treated as being held on behalf of the contracting public authority.”

Our amended freedom of information code of practice sets out that public authorities should agree what information is held on their behalf with private companies when entering into contracts, that those arrangements should be set out clearly and, indeed, that requests made to private companies providing public services should be passed to the relevant authority to answer. At present, therefore, the Government feel that the Freedom of Information Act strikes broadly the right balance.

Before I close, I will deal briefly with how the Act currently functions. Of course, the point has been made by the hon. Member for Hammersmith that secondary legislation is easy to use in this space. As he knows, orders can be made under section 5 of the Act, if it appears that particular bodies are exercising functions of a public nature; a number of other specifications are also made in that section. Such an order must be preceded by consultation with every person to whom it relates or with persons appearing to represent them.

I come back to the point that, although it may appear that section 5 orders are a straightforward and quick way to bring particular bodies into scope, the provisions in the legislation require consultation with all affected parties, and they further require a careful definition of what information that is held should fall within the Act. That is complex to do, and carries risks.

Adding to the scope of the Act through section 5 also requires a debate in both Houses. Some examples have been given of where these provisions have been used most recently, but I raise this matter to emphasise that the process is not necessarily a quick or straightforward one, and indeed that it is a virtue that such a process is set out in the Act already. Although the process is neither quick nor simple, it is the process that we should use to assess questions about scope.

To conclude, before obviously leaving time for the hon. Gentleman to sum up the debate, I say again that the Government are committed to the principles of transparency and openness across the public sector. We are proud of our reputation as a leader on data transparency. Indeed, we have evidence of that from one particular index that ranks the UK as eighth in the world for transparency, which is an important record. Transparency is crucial to deliver the public value for money, to assist taxpayers and to get the best services for citizens. However, proactive publication needs to be balanced with the other considerations that I hope I have set out for the Chamber today. The Freedom of Information Act is a very important tool in that box of transparency and the Government are absolutely committed to it. We want to see freedom of information used widely, but I hope that it has helped the Chamber today that I have set out some additional considerations in response to the hon. Gentleman’s arguments.