The G4S Olympics security fiasco has rekindled the debate over private suppliers using ‘commercial in confidence’ excuses to avoid openness in public contracts. Now, more than ever, we need to make all our public services transparent and accountable
Last week I heard Margaret Hodge, the Chair of the House of Commons Public Account Committee, call for greater transparency and accountability of private sector companies contracted to deliver public services.
The chaos surrounding the Olympics security contract with G4S has reminded us that so much of public service contracted services, their providers, performance and contract terms are hidden from public view and scrutiny. The usual excuse for the opaqueness recited by providers and public sector clients is ‘commercial in confidence’. The retort should be ‘public money being spent in the public interest’.
Public scrutiny is required so we can track public expenditure raised from taxation. We need to understand the impact of such expenditure and whether there is value for money. We need informed decisions about future as well as present public service delivery models and arrangements so have a right as public and our politicians have a right on our behalf to know what is happening behind contracts.
As private sector executives and managers increasingly have influence over key public services including health, education, policing, transport and much more we are entitled to know as much about their incentives and rewards as we so about those of their public sector counterparts. Inevitability these incentives and rewards could have an impact on behaviours and consequently service performance. The same applies to corporate and shareholder behaviours, incentives and expectations.
The government’s phrase ‘Open Public Services’ must also mean ‘public services that are open’, so I set out eight proposals:
- Extend the Freedom of Information Act to all contracted public service providers and not just to the public sector as client and provider. This reform now being called for by Hodge is long overdue. It should be accompanied by a duty on these providers to present information openly without due consideration to the interests of and pressures from their public sector clients.
- Allow the National Audit Office and other auditors, regulators and inspectors full access to information, data and personnel in non-public sector providers. Their current powers in this regard are limited.
- Require providers to give evidence to Parliamentary select committees and local government scrutiny committees without prejudice to their contracts, so as to avoid any perception of collusion between client and provider; and to ensure that clients can be properly held to account.
- Require the providers of significant public contracts to publish the details of their senior executive’s remuneration including bonuses (and how these are ‘earned’) and any share option entitlements; as well as the provider’s remuneration policies in respect of issues such as ‘the living wage’ (surely a minimum requirement for any public service provider) and the ratio of highest to lowest pay (again could these ratios be contractually set?).
- Require the disclosure of the wider shareholding and business interests of board members and key decision makers – this would extend what is to some extent already the case.
- Require all companies bidding for public service contracts to publish their tax policies, those of their parent companies and of their subsidiaries. Details of the tax payments in the UK and elsewhere should also be publicly available to ensure full transparency.
- All bidders and contractors should have to be open about company ownership and their corporate business models with any significant changes agreed with major public sector clients. Of course, exactly the same requirements should be placed on politicians (and are to a greater extent) and to public officials responsible for commissioning services and for those responsible for procuring, letting and managing contracts.
- All public sector contracts must be made available on-line and should be verified. Where appropriate, independently audited performance data measuring outcomes against contract terms should be published Financial performance data should also be made available in accessible forms and where there are contractual joint venture companies, profit share arrangements or profit ceilings, financial returns should be independently audited prior to publication.
When companies bidding and/or providing contracted services are subsidiaries of larger groups and/or have business outside the UK public sector, the above proposals should apply to the parent group and to the whole company.
In introducing such measures it would be important to avoid unintended consequences. Consideration needs to be given to avoiding prejudicing procurements processes. These measures have to be reconciled with company law requirements.
Any arrangements would need to be designed and applied in ways that are not overly bureaucratic and expensive to administer. They should not inhibit innovation and not deter new entrants or smaller organisations from any sector contributing to public services. For example, there could be total contract value thresholds below which providers would be exempt from these requirements.
In the above I have assumed that these requirements would apply to private sector businesses contracting with the public sector, but there needs to be a debate as to whether they should in whole or part also apply to third and social sector providers.
What surely is not in question is the need to make all our public services more transparent and accountable in order to restore public confidence and the principles of public accountability. If providers don’t like transparency they don’t have to bid for public contracts.