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 it 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?
4.15 pm
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. I return here briefly to an example which I have given previously in your Lordships’ House about the contentious issue of parking tickets. In 2007, Islington Council received a freedom of information request for information about the criteria used to reward parking attendants for good results. The parking attendants were employed by National Car Parks Ltd under a contract with that council, and the rewards included bonus performance payments and points that could be spent at Argos.
The requester wanted anonymised information about the rewards provided to the best performing attendants, including the number of penalty charge notices issued by them, the number of complaints involving those attendants and the number of notices subsequently cancelled. The requester clearly suspected that the incentives were leading parking attendants to issue as many notices as they possibly could, regardless of the justification. The council replied that it did not hold such statistics, and the contract did not give it power to obtain them from National Car Parks.
The Information Commissioner examined the contract in force at the time and found that it imposed no requirement on National Car Parks to provide statistical
information about the Argos points, the performance payments to individual staff or the criteria used to decide who should receive these. The commissioner concluded that this information was not held on the council's behalf and was not accessible to it under the Freedom of Information Act. Yet that information was central to any attempt to understand whether the incentives were encouraging notices to be issued improperly.
I am sure that many of your Lordships will be aware of just how sensitive this issue can be. This is the kind of problem that may occur when people attempt to use the Freedom of Information Act to obtain information about such contracts. The amendments seek to address some of these issues, although sadly it is not possible within the scope of this Bill to address all of them.
Amendment 17 seeks to make the work of local auditors scrutinising private sector bodies performing work contracted to them by local authorities—in other words, work of a public nature—accessible to the public under the Freedom of Information Act. It seeks to make it clear that such bodies are so covered in the Bill.
That is not to say that such information will have to be disclosed. If the local auditor is asked to publish information under the Freedom of Information Act, under proposed new subsection (2), it will be subject to the exemptions in the Act to protect legitimate interests. For example, the exemption in Section 43 of the Act protects trade secrets or information likely to prejudice the commercial interests of the contractor or the authority, subject to a public interest test. Again, Section 40 protects personal information about any identifiable individual, including members of the contractor's staff, if disclosure would breach the principles of the Data Protection Act. Other exemptions apply where disclosure would be likely to endanger health or safety, prejudice law enforcement or defence, or cause other types of harm.
Whenever freedom of information is involved, those opposed to transparency in government rehearse arguments about cost as a reason for opposing it, and I hope that Ministers will not do that today because there need be no substance in such arguments. This requirement should not be onerous for local auditors. They will have the raw data already; they will not have to set up new mechanisms to collect them. All they will have to do is process them, and efficient information management systems should make that easy and cheap. If local auditors do not have efficient information management systems, then they should have. They should accept whatever marginal costs transparency to the public imposes on them as the price of their entry ticket into such a lucrative new stream of public sector work.
If any local auditors seek to pass on such marginal costs to the local authority, then competition for this new stream of work should enable the local authority to find an auditor who absorbs such costs. If the Government were to suggest—and I hope they will not—that such competition does not exist because of the relatively limited number of such auditors available to do such work, then, as a Government that believe in
the virtues and beneficial effects of free markets, I hope they will make sure that such competition exists in future.
Amendment 18A is a straightforward attempt to place local auditors in the same position as the Audit Commission now being replaced by them in making them subject to the Freedom of Information Act. As with Amendment 17, this provision will be subject to the exemptions in the Act to protect legitimate interests. I tabled this amendment in addition to Amendment 17 because that amendment only provides access to information which the auditor obtains from the contractor, not to other information held by the local auditor. Although some of this information will come from the local council, there is no right of access to other information held by the auditor, including information that it generates itself—notes of meetings with the council or third parties or correspondence that it has with bodies other than the council such as people objecting to the accounts. Amendment 17 on its own does not bring auditors into line with the position of the Audit Commission, which is already fully subject to the Freedom of Information Act, but this amendment does.
There is one further difference between the arguments for Amendment 17 and this one. Amendment 17 seeks to extend transparency. This amendment seeks simply to maintain the existing situation. For the Government to resist it would represent a significant restriction of transparency in local government. Quite apart from the fact that this would resile from the commitment made in the coalition agreement, it would in my view represent another threat to the public interest, in the way I have already described.
We have seen over and again how restricting freedom of information and transparency damages the public interest. It is revealing how those in the Care Quality Commission saw freedom of information as a key threat to their cover-up. The deputy chief executive is quoted in the Grant Thornton report as saying that the internal report,
“had to be deleted as it was posing an ‘FoI risk’ for the organisation as it was negative and therefore damaging”,
for the Care Quality Commission.
In so many ways, work that the local auditors will be scrutinising will be as important to the public as that scrutinised by the Care Quality Commission. We have seen that auditors can be as prone as anyone else to seeking to cover up their mistakes. Transparency and freedom of information are among the best weapons the public has against that.
If the Minister is minded to resist one or both of these amendments, I should be grateful if she could explain why the Government believe that transparency and a duty of candour are so important in the NHS, but not in local government. On the other hand, if the Government resist, as I fear they might, only because they feel the drafting of these amendments is defective in some way—and drafting can usually be improved—I should be grateful if the Minister could at least indicate that the Government are content with the principles underpinning them and work with me to bring forward improved amendments on Report. I beg to move.