(11 years, 3 months ago)
Lords ChamberMy Lords, this amendment is designed to bring greater transparency to the relationships between local authorities and the private contractors to whom increasingly large amounts of public services are being contracted out. Billions of pounds are at stake in these contracts and the recent revelations about the electronic tagging work carried out by private sector firms for the Ministry of Justice are just the latest example for the case for greater transparency in these arrangements.
I moved a similar amendment at both Committee and Report, when I set out the merits of greater transparency in tackling fraud and corruption, incompetence and inefficiency and in terms of citizens’ rights to know about the services provided to them and the taxpayers’ right to know about the services they pay for. I do not need to detain your Lordships today by rehearsing those arguments again at length.
The Government appear to believe that there are already sufficient provisions for transparency for this amendment not to be necessary, but the fact that local authorities themselves are covered by the Freedom of Information Act does not always provide the necessary transparency for private sector bodies carrying out public sector work, as I argued at Committee and Report, nor does the right of electors to inspect accounts and audit documents, important though that right is and has been for the many years.
At the heart of the Government’s resistance appears to be a belief that transparency increases cost. I addressed this argument at length on Report, by analysing the Government’s figures, which suggest that such costs are likely to amount, if at all, to an increase in a tiny percentage of the sums involved. The Government have not, so far, questioned my calculations. I also pointed out that transparency can save money often by revealing fraud and corruption, incompetence and inefficiency. However, I recognise that Ministers fret about things which sometimes they do not always need to fret about and, in an attempt to set their minds at ease, I have made two changes that I hope will go some way towards meeting the Government’s concerns.
First, in this amendment, there is a provision for a review after five years to see whether the Government’s concerns about costs among other things are justified. Secondly, I have inserted “significant” into the amendment to make it clear that it is not intended to cover the provision of services by small businesses, nor the work of town and parish councils, as in those cases this amendment might be unnecessarily onerous. I hope that, even at this late stage, Ministers might reconsider their position on greater transparency in this area and that these changes might encourage them to do so. I beg to move.
My Lords, Liberal Democrats campaigned hard for freedom of information long before the Act was passed and have since been consistent and enthusiastic supporters of its provisions. It follows therefore that we start with considerable sympathy for the issue that the noble Lord, Lord Wills, is pursuing. This is the first time I have spoken on his amendments and I am grateful to him for pursuing the issue at all stages of the Bill.
It is timely because we are now seeing in local government a significant and substantial change towards commissioning. It is not quite the same as outsourcing, as has been referred to, but it is largely brought about by budget pressures and is a change that is coming anyway. Now and in the years to come we will see local authorities all over the country of all political persuasions increasingly commissioning services not just from commercial contractors, but from the third sector, joint ventures, charities and so on. I am pleased that the noble Lord has therefore included in subsection (4) of his proposed new clause a reference to,
“joint ventures, not-for-profit organisations”,
and so on, because that is at least in part the direction in which we are heading. For all those reasons, I am pleased that we have the opportunity to debate his amendment. I am also pleased that he included “significant” for reasons that he explained. I assume it will mean that all the smaller sub-contractors, for instance, will not necessarily be covered by this, and that is welcome too.
My Lords, I will briefly intervene to follow up some of the comments of the noble Lord, Lord Tope. From 1986 onwards, I argued in the Commons for revision of the law governing the provision of information to the public. It was during a very interesting period following the arguments in the mid-1980s over Tony Wright and the reform of the Official Secrets Act.
One of the reasons we argued for freedom of information was that we believed that it would change the conduct within local authorities. My noble friend’s amendment would extend those rights of access to a group of organisations that effectively are carrying out the functions of local authorities. In saying, “change the conduct”, I refer back to the comments of the noble Lord, Lord Tope, on the additional cost. However, no-one has been able to quantify the benefits financially to local authorities of being more transparent in their operations. I frequently used freedom of information requests to press local authorities and other public bodies on the way that they conduct themselves. After a series of freedom of information requests, one sometimes notices a change in the way that a local authority conducts its affairs. Very often, it means greater efficiency, the saving of public money and a happier general public paying their council taxes.
When the Minister winds up, I do not think that he should see the issue simply in terms of costs; he should think about the actual benefit to the taxpayer of a system that is far more transparent in its operations.
My Lords, I had intended to add my name to the amendments tabled by the noble Lord, Lord Wills. I regret that probably I advised the clerks too late for that to happen. I start, therefore, by apologising to the noble Lord.
As did the noble Lord, Lord Tope, I declare my interests as a newly polished and appointed vice-president of the Local Government Association and a possibly somewhat more tarnished president of the National Association of Local Councils. The issue is one of not adding unnecessarily to costs, as the noble Lord pointed out. Part of me says that whenever locally—or at whatever level—a greater throughput of taxpayers or public money is being used, it is right that the level of scrutiny is proportionate. The reference to “significant private companies” is perhaps slightly less than I would have liked. I would have liked the figure itself to have been objectively significant rather than the company providing the service being significant. I am not sure that I know what a significant company is in this context, whereas I am clear as to what a significant figure might be.
However, it is right that auditors should have a degree of discretion in looking at this. As I said at an earlier stage in the Bill, we may be looking at quite small organisations that, for whatever reason—perhaps because of some project they are undertaking—may be responsible for deploying fairly significant sums. It is right that those should be subject to scrutiny. There is no place here for opacity in the way in which figures are presented. Therefore I very much support the principle of this amendment.
I will digress, if I may, onto the freedom of information issue. I am aware that one of the get-outs in relation to providing freedom of information data is when the request is considered to be vexatious. The standard of “vexatious” as a term of art seems to be a matter of self-assessment to a degree by the body that is providing that information; at least, that is how it seems to me. The noble Baroness opposite is shaking her head slightly; if I have got it wrong, I apologise. However, it seems to me that that is capable of a degree of latitude. I certainly have seen evidence of “vexatious” used as a reason for not providing information—although not in the context of local government—and the term ought to be made a little clearer. In general terms, I support what the noble Lord, Lord Wills, has put forward and am grateful to him for continuing to bring it to the attention of the House.
My Lords, first, I declare an interest as the current chairman of a local authority audit committee. I shall chair a meeting later this evening. I shall add a touch of reality to the comments made by other noble Lords.
The first subsection of the amendment moved by the noble Lord, Lord Wills, states that the local auditor is to have right of access to the books and records of contractors. In the real world, any local authority worth its salt has in all its contracts a clause allowing it access to the documents of its auditors or the processes that those local auditors use. If a local authority does not have that, shame on it. What we are perhaps trying to do here is to put into legislation something that is a normal commercial attitude that local authorities or corporate bodies should do anyway. As my noble friend Lord Tope said, commissioning is coming on in so many local authorities, and the measure and size of some of the contracts will be very significant. With these large commissioning items, it is not the legislation that should be relied on but the normal contractual terms between the local authority and the contractor. The Government and the noble Lord, Lord Wills, are right to highlight that local authorities should deal with this with their contractors. As my noble friend Lord Tope said, when the Government review these matters, even after this Bill is passed, they should perhaps seek to encourage that within local authorities.
Subsection (3) of the amendment states:
“A local auditor must make available on request any audit documents, obtained under … the Freedom of Information Act 2000”.
That worries me somewhat because, if something is too rigid and too demanding, the net result in practical terms is that people do not put it down on paper in order not to be subject to freedom of information. That might discourage the local auditor from carrying out its job in a deep way. I am all for transparency, but it should be transparency as the auditor feels is right rather than being enshrined in law. Although I understand where the noble Lord, Lord Wills, is coming from, and I appreciate the amendment, I hope that it will encourage the Government to review matters before the Bill becomes law.
My Lords, I join others in declaring membership of the LGA vice-presidential mafia. I am also a member of Newcastle City Council’s audit committee. I strongly support my noble friend’s amendment, as did the noble Lord, Lord Shipley, a former leader of Newcastle City Council who, alas, is not in his place.
I congratulate the noble Lord, Lord Tope, on the ingenuity with which he has contrived some wriggle room to justify supporting the Government this afternoon as opposed to doing what the noble Lord, Lord Shipley, would perhaps have done had he been here and opposing them, but I do not think his arguments carry very much weight. He is particularly concerned about the cost of these matters, but the audit is carried out on these services whether they are provided as of now by the local authority or by an external body. There ought to be a level playing field in that respect in any event so that there will be a cost of proper auditing by the district auditor and it should not add to the burden that is currently experienced.
The argument that the noble Lord adduces about the need to assess the situation is perfectly fair, but of course it is provided for in the amendment. One could argue that my noble friend has been excessively generous in saying that the review should take place after five years. It may be that a shorter period will be short enough to assess the functioning of the system and, if there is still a question as to the costs, the costs. However, the principle of my noble friend’s amendment is clearly right.
My Lords, I start by thanking the noble Lord, Lord Wills, for our useful discussions about Amendments 1 and 2, both after Committee and again earlier this week. I also acknowledge his commitment to this agenda and the enthusiasm with which he pursues it.
Amendment 1 seeks to give auditors a right to access audit documents of significant contractors to local authorities and to make these available on request. Amendment 2 is concerned with extending freedom of information rules. The debate we have just had has extended over both amendments and, to some extent, I have to answer both amendments, even though the noble Lord chose to separate the two last night.
I acknowledge that there is a wider issue here, as the noble Lord, Lord Beecham, has just said, about the appropriate levels of audit, transparency and accountability for private providers of public services—whether they be for-profit companies, not-for-profit voluntary organisations or others. This issue has grown over the past 25 to 30 years as successive Governments of all parties have outsourced public services, both from the national and from the local level. As the noble Lord, Lord Beecham, pointed out, recent publicity over inadequate performance has heightened public interest and interest in this House, although I should note that almost all the recent cases publicised have been about nationally negotiated contracts, not local contracts. Noble Lords may have noticed that the Atos contract with DWP on work disability assessment included provision for DWP audit. That has now discovered certain weaknesses for which Atos has apologised.
I encourage the noble Lord to pursue this issue further. I will repeat what I said on Report: both Parliament and the Government need to look at this issue in general. With my Cabinet Office hat on I would say that the Cabinet Office is actively looking at the issues of commissioning and contracts and how to make sure that we are raising standards across Whitehall. The new Commissioning Academy, the Government’s champion for the non-profit sector, is part of how we are working at learning from mistakes that have been made, both under this Government and under our predecessor, and raising the level of approach. It would be highly appropriate for Parliament to look at this in parallel with the Government. As I suggested on Report, I encourage the noble Lord, Lord Wills, to consider whether he should bid for a sessional committee, for example, which would examine the changing relationship between non-governmental providers of public services and local authorities and national authorities to see whether we can find consensus across the parties on how we approach this issue.
On the wider issue, nevertheless, I have to say that the case has to be made. I suspect that the noble Lord, Lord Wills, was, in his commitment to greater transparency and freedom of information, in a minority in the previous Government. I recall that the Prime Minister Tony Blair said that the Freedom of Information Act was the biggest mistake that they had made. I share, as do all those in my party, a commitment to transparency in government, and the coalition Government have done their best to extend transparency. In many ways, however, there is rather further to go, particularly when one comes to the relations between the private sector and the public sector—the private for-profit sector, which pleads commercial sensitivity and additional costs from the extension of the sort of transparency and audit which the noble Lord is approving.
This specific amendment is not necessary because the Bill already gives these powers to local auditors. Clause 21 enables local auditors to access whatever documents and information they think are necessary to undertake their functions under the Bill. That includes documents held by local authorities’ contractors if the auditors consider that these are necessary in order to undertake their functions. That covers all the functions in the Bill, not just the audit of the financial statement but all the additional functions that are unique to local public audit such as the consideration of questions and objections from the local electorate and the issue of public interest reports. Schedule 11 to the Bill also includes provisions which enable local auditors to disclose information necessary to answer those questions and objections. The Government’s code of recommended practice for local authorities on data transparency recommends a minimum set of data to be published locally. All local authorities now publish expenditure over £500 and many publish their contracts. No audit firms have yet indicated that the current access rights are inadequate or lacking.
That being the case, I argue—I hope the noble Lord recognises that I do not argue the resistance to his amendment primarily on cost grounds—that the case is not made on this amendment. We all recognise that there is a wider issue about the overall transformation over the past 25 years of the relationship between government as provider of funds and the private, profit and non-profit sectors as the provider of those services in return for funds. However, I agree strongly with my noble friend Lord Palmer of Childs Hill, who said that much of this is covered in the contractual relationship. We are all learning about how to improve that contractual relationship. The Government, particularly within the Cabinet Office, are working on how to extend best practice across the Government nationally as well as assisting local authorities. Having given all of those assurances, I hope that the noble Lord feels able to withdraw his amendment on the condition that we will continue to discuss and examine this very broad issue.
My Lords, this has been a short but useful debate. I am grateful to all who have spoken in it and for the fact that everyone—except the Minister—has broadly supported the amendment. I congratulate the two new vice-presidents of the Local Government Association on their contribution on this subject. I am also grateful to the Minister and the noble Baroness, Lady Hanham, and their officials for their willingness to engage continually with me on this subject. I have benefited from our discussions.
I am grateful, too, that the Minister expressed his continuing willingness for the Government to keep looking at this issue. That is a step forward from the Committee stage and the Report stage. Although the Government have not accepted the amendment, I am grateful for what I take to be a slow, almost imperceptible, warming of their position on it. However, looking at this issue is not the same as doing something about it. It is not the same as taking advantage of what is likely to be quite a rare legislative opportunity to bring greater transparency to this important sphere of public life.
The Minister mentioned two primary reasons for resisting the amendment. One was commercial sensitivity. However, he will be well aware that the Freedom of Information Act 2000 has an exemption for commercial sensitivity—subject, of course, to a public interest test. So, with all respect to him, I am not sure how far he would wish to pursue that argument.
The Minister then focused on the idea that the amendment is not necessary. Both he and the noble Lord, Lord Palmer of Childs Hill, relied for their position on the fact that good local authorities should have this aspect covered anyway in their contractual relationships with private sector companies providing outsourced work. The noble Lords are, of course, right. Good local authorities should have this covered. If all local authorities were good local authorities, my amendment would not be necessary. But they are not. They make mistakes and they overlook things, as we all do. In Committee I gave examples. I notice that the noble Lord, Lord Palmer of Childs Hill, did not say that all local authorities do this. He said, quite rightly, shame on those that do not, but he conceded that there are those that do not. I think that the Minister himself said that “much” of this—not all of it—was covered under the contractual arrangements. That is precisely what the amendment seeks to remedy. It seeks to ensure that all local authorities bring greater transparency to this crucial area of public life, where billions of pounds of taxpayers’ money are at stake. We have seen already how necessary this is.
In the light of that, I am afraid that I shall have to resist the Minister’s invitation to withdraw the amendment. Because the Government are warming to this idea, I hope that this House can send a signal to the other place about the importance of transparency and perhaps encourage the Government, when the Bill gets there, to move further on this issue. I therefore beg to test the opinion of the House.
My Lords, I moved an identical amendment to this at both Committee and Report stages of the Bill. I will not rehearse again all the arguments I set out at both stages or the merits of greater transparency, which we discussed in the debate on the previous amendment, the advantages of tackling fraud, corruption, incompetence and inefficiency, or the principled arguments in favour of citizens having the right to know about the services provided for them to the maximum extent possible and of taxpayers knowing as much as possible about the services for which they pay. However, I stress again that this amendment sets out not to promote an increase in transparency so much as to tackle a decrease in transparency which is brought about by the new arrangements under the Bill.
As I said on Report, the Audit Commission, which is being replaced by the provisions of the Bill, was covered by the Freedom of Information Act. My understanding is that in addition to information that it held for its own purposes, which of course was covered by that Act, other information held by auditors would also have been regarded as being held by the commission in certain circumstances, and therefore would also be covered by the Freedom of Information Act—for example, when the Audit Commission was investigating a complaint against a specified auditor, when it was conducting a quality control assessment of an auditor’s work or when it had required an auditor to provide information for the discharge of wider commission functions such as making judgments on local authorities’ use of resources. In such circumstances, such information would have been deemed to be held by the Audit Commission, and therefore would be subject to the Freedom of Information Act. These are important categories of information that cover significant areas of public interest and concern. Yet, as far as I can see, no public authority as defined in the Freedom of Information Act has inherited those responsibilities from the Audit Commission under this Bill. Therefore, under this new regime, such information will no longer be covered by the Freedom of Information Act. I think that it should be.
This restriction of transparency damages the public interest and the amendment seeks to prevent that happening. At previous stages, this amendment received support from all sides of the House and has the support of the Local Government Association. Only the Government have stood out against it. In the light of our previous discussions on this issue and the previous debate today, I hope that they will now change their minds. I beg to move.
My Lords, my noble friend is absolutely right to point out that this is simply a question of preserving, or perhaps reviving, the level terms on which freedom of information has hitherto applied. It is different from the previous case that we debated. No question of cost is likely to be germane to the amendment. It is simply there to ensure that the transparency currently available within a local authority’s documentation is extended to those with which it contracts, subject to the Freedom of Information Act provisions and exemptions. There seems to be an unanswerable case for ensuring that that degree of transparency will apply as it applies now, before the Bill is enacted. I concur with my noble friend who urges on the Government acceptance of this provision, which is different from the previous amendment and to which I can see no possible objection, even from Liberal Democrat Members of your Lordships’ House or, indeed, elsewhere.
My Lords, the Government are keen to promote transparency. As I have previously suggested, they are sometimes keener than their predecessors were to promote transparency and accountability around outsourced services. However, we agree with the Justice Select Committee’s recommendations in its post-legislative scrutiny of the Freedom of Information Act and consider that the better approach is to preserve transparency through contractual provisions, rather than the formal extension of the Freedom of Information Act at this time. In 2012 the Justice Select Committee considered in detail during its post-legislative scrutiny the challenge of how to deal with contractors of public authorities. The committee concluded that,
“contracts provide a more practical basis for applying FOI to outsourced services than partial designation of commercial companies under section 5 of the Act”.
If it is the Government’s intention to see how the system works and then possibly take further steps, why do they not accept the amendment on the basis that it will incorporate in another place a sunrise clause, giving it the opportunity to proceed without primary legislation, which would otherwise be involved?
My Lords, this Government, unlike their predecessors, are concerned to minimise the number of burdens on business, contractors and on the voluntary sector. After all, we are dealing with a large number of non-profits. We want to see whether the system works before adding more regulation.
Let me end by reiterating that increasing transparency is important but we do not see that the amendment moved by the noble Lord, Lord Wills, provides the right approach at the current time to the problems that we face. Local people already have the right to ask questions and raise issues with the auditors, and the Government are committed to keeping under review the current approach to encourage local authorities and contractors to interpret their obligations more broadly and, if necessary, consider other approaches.
My Lords, I am grateful to my noble friend on the Front Bench and to the Minister for his response, but I am baffled by it. He has not argued on the fact that it is a decrease in transparency, does not maintain the status quo and does not provide citizens with the right to know, in the way of the old regime. Yet the Minister wants time for this decrease in transparency to bed in.
My Lords, I do not accept the noble Lord’s contention that it is a decrease in transparency. As I remarked on the Atos cases, on which there has been some publicity, the way in which contracts are now being formulated provides for a considerable expansion in transparency in how they are negotiated, and with access to the public authority as contractor. We simply do not accept what the noble Lord is arguing.
I am grateful for the Minister’s intervention but he has still not answered the question. It is clear that the Minister cannot guarantee—I will sit down if he can do so—that all local authorities will formulate their contracts with private sector contractors in a way that guarantees the transparency that he says he wants. I am happy to sit down if he can guarantee that. The Minister is not moving in his seat. Of course, he cannot guarantee it.
There is a difference of philosophical approach between the two parties and the current position of the Labour Party. The Labour Party is rather more centralist and authoritarian and wishes to tie everything up together. We are trying to provide more flexibility and more autonomy. That is why we are attempting this slightly less centralised and over-regulatory approach.
I agree that there is a difference between the two sides on this. However, it is not about authoritarianism but about whether we trust a bunch of politicians or the citizen with the right to transparency. The whole point of freedom of information is that it gives the citizen the right. The Minister wants to give private sectors and politicians the chance to stitch it up between them without giving the citizen the right to scrutinise it. That is the difference between the two parties. It has nothing to do with authoritarianism.
However, the Minister has still not addressed the point that this is a decrease in transparency. He has not said, for example, how the coalition will decide, when it reviews the arrangements that the Bill will bring in, whether transparency needs to be increased. By its definition it will be almost impossible for the coalition to find out and I am curious about how the review will be conducted.
The Minister focused his remarks on the relationship with the private sector but the amendment covers not only that relationship but local district auditors. That is the key point. The citizen and the taxpayer need transparency in the operation of the people who scrutinise the delivery of public services. I remind the Minister that the Grant Thornton report on Mid Staffs showed how important it is that there should be transparency in the work of those who monitor and scrutinise the delivery of public services. The Government say that they have learnt the lesson from Mid Staffs but the Minister, whatever he says, has just proved that they still have not learnt the lessons about the merits of transparency.
However, I notice the Minister’s careful words. He said that “at this time”, “at this stage”, he is reserving his options. It may be that between now and the Bill going to the other place the Government will change their mind and it will not be “at this time” any more but “at another time”. With that and the disappointingly unsatisfactory response from the Minister in mind, and in the hope that your Lordships’ House will send a signal to the other place, I ask leave to test the opinion of the House.
My Lords, Amendment 3 is a further minor consequential amendment to the Public Audit (Wales) Act 2004 following the closure of the Audit Commission.
The Public Audit (Wales) Act 2004 transferred a number of powers from the National Audit Office and the Audit Commission to the Auditor-General for Wales. This Bill already repeals some sections within the Public Audit (Wales) Act 2004 which refer to the Audit Commission. Sections 69 and 70 provide transitional arrangements to enable auditors of Welsh local government and NHS bodies who were appointed by the Audit Commission to continue for the whole of their term, despite the Public Audit (Wales) Act 2004 transferring responsibility for auditor appointment from the Audit Commission to the Auditor-General for Wales.
Section 69 also makes transitional provision to enable the Audit Commission to complete any studies which include a local government body in Wales that were under way at the time of the transfer. The Welsh Government have now confirmed that the transitional period has been completed and that these provisions can be repealed. I beg to move.
My Lords, I am sure they will be putting up the flags in the valleys and hills of Wales tonight in celebration of this government amendment, which I am happy to support.
My Lords, I beg to move that the Bill do now pass. It is my pleasure to thank the Members of the Committee who have helped us through the Bill over the past few months. I am extremely grateful to everybody who has taken part and, as always with Bills leaving this House, I think it has been strengthened as a result. It might be worth reflecting that in response to issues raised during the debate, the Government have made 15 individual amendments, not including minor, technical amendments, and we have also made clear our intention to amend the Bill in the other place to enable the non-mandatory central procurement of auditors on behalf of relevant authorities. We are also considering other points in relation to the data-matching powers, so there have been significant interventions and significant help and I thank all noble Lords, on the opposite side and in the coalition, for all they have done to see us through the past few months.