Local Audit and Accountability Bill [Lords]

James Morris Excerpts

Tuesday 17th December 2013 Commons Chamber

Departments are under considerable strain in monitoring their contracts because staff numbers have collapsed under the Government’s cuts. The public therefore deserve the right to do some monitoring of their own. There would be real accountability if the private firms and other organisations that spend those billions of pounds of taxpayers’ money were compelled to answer directly to the public by providing responses to questions about what they are doing.

[James Morris (Halesowen and Rowley Regis) (Con)]

The hon. Gentleman seems to be talking about large private companies. Subsection (4) of new clause 2, to which he is speaking, includes in the definition of a private company

“joint ventures, not-for-profit organisations, mutually-held organisations and charities.”

Is he not concerned that the new clause would place large costs on smaller organisations that might not be able to handle the kind of requests he is talking about?

[Alex Cunningham]

No, I am not. As my hon. Friend the Member for Corby (Andy Sawford) said in opening the debate, this proposal relates to substantial contracts. It does not include the smallest organisations and we must ensure that they are protected. However, I would say that such organisations have a responsibility to be accountable for anything that they do when spending public money.

In the new world, public and private providers will ultimately be responsible for delivering equivalent services, but they will be governed by different rules. If a public partnership wins a contract to deliver refuse services, it will be subject to the freedom of information provisions, but its private sector rivals for future contracts would not be. Why should that be so? Private contractors that provide services should undoubtedly be held to the same standards of responsibility as state providers. I do not believe that anyone can argue to the contrary. It is therefore logical that the right to information about their regimes and establishments should also be equivalent.

So that there is no mistake, I remind Members that in announcing measures in 2011 to allow the publication of further spending and performance data on public services, the Prime Minister spoke of the “power of transparency”. Indeed, he went on to assert that, “Information is power.” He even suggested that

“we need more of it.”

I know that this is unusual, but I agree with the Prime Minister that we need more of it.

To put it simply, many non-public sector providers shelter themselves from open scrutiny and operate behind a screen of secrecy that simply is not compatible with the principles of public service provision. Such stealth and secrecy cannot be allowed to continue. It is only right that as more and more public services that were once the sole preserve of local and national Government are contracted out beyond the public sector, steps are taken to ensure that the same access arrangements are required of private and voluntary sector providers. To do otherwise is unfairly to insulate the Government, the Department and favoured contractors from adequate scrutiny and accountability.

One of the major risk factors that flow from a position of secrecy is the potential for fraud and corruption. Other Members have addressed that point in more detail. In public service provision, that is a crime against each and every taxpayer, and the public should be granted protection against such transgressions by all providers of public services being made subject to the requirements of the Freedom of Information Act. We have already seen the failures of some companies that were happy to take the taxpayers’ billions, and some people may face legal action as a result. For such reasons, we cannot afford to overlook the importance of new clause 2. Its additional safeguards are particularly important given the Government’s recent poor track record on commissioning services.

I know that the Government will bang on about commercial sensitivity, but that is nonsense. This is about fairness, open government and, above all, trust. For those reasons, I fully support new clause 2.

--- Later in debate ---

[Chris Williamson]

Indeed I am, Mr Deputy Speaker, and I am grateful for your guidance. I was just about to conclude my remarks about Shirley Porter by saying that she privatised at will, as well.

In Committee, we heard a lot from the Minister about his commitment to transparency. His Back-Bench colleagues reinforced that point. However, the Bill will make transparency considerably more difficult, because arrangements within local authorities will be considerably more opaque. Transparency International, which my hon. Friend the Member for Hayes and Harlington (John McDonnell) quoted, was scathing about the Bill, stating:

“The range of measures outlined in this Bill, combined with recent legislative reforms under the Localism Act 2011, remove key institutional defences against corruption, replacing them with arrangements that are likely to be inadequate to protect the public interest and the public purse.”

We hear a lot from the Government about their concerns for the public purse and the need to ensure that the taxpayer gets value for money, yet it seems that, unless they accept our new clauses, they are being cavalier with the public purse in this case.

I hope that the Minister will reflect on what has been said today. Unless the new auditing arrangements are subject to freedom of information provisions, their opacity will grow. I do not want to strain your patience too much, Mr Deputy Speaker, but circumstances such as the Shirley Porter case will not be uncovered. It is essential that new clause 2, tabled by my hon. Friends the Members for Corby and for Stockton North (Alex Cunningham), is accepted; otherwise private sector audit companies will not be subject to the scrutiny that was previously available under the Audit Commission arrangements. Even when there were external auditors, the information that they held was deemed to be held by the Audit Commission and was therefore subject to scrutiny by the general public. My hon. Friends and I say that it is important that proper scrutiny is still available under the new arrangements. As we heard from my hon. Friend the Member for Corby, local enterprise partnerships are now also spending considerable sums of money.

[James Morris]

Will the hon. Gentleman clarify the meaning of proposed subsection (1) of new clause 2? It states:

“A local auditor has a right of access at all reasonable times to audit documents from private companies to whom the local authority has contracted significant services during the last financial year.”

Does that mean that a local auditor should have the right to access any and all documents within such companies irrespective of whether they are relevant to the relationship with the local authority? That would give the local auditor carte blanche to access any document at all in those organisations.

[Chris Williamson]

It means documents relating to the contracts under which companies are working for the local authority. Clearly, it would be overly burdensome and inappropriate for all their documentation to be subject to the Freedom of Information Act, but it is perfectly reasonable in respect of work they are doing on behalf of a local authority, as is made clear later in the new clause. The hon. Gentleman’s concerns are misplaced, and the new clause is entirely reasonable.