Draft Local Government (Transparency) (Descriptions of Information) (England) Order 2014
The Committee consisted of the following Members:
Blears, Hazel (Salford and Eccles) (Lab)
† Coffey, Dr Thérèse (Suffolk Coastal) (Con)
† Fabricant, Michael (Lichfield) (Con)
† Glen, John (Salisbury) (Con)
Godsiff, Mr Roger (Birmingham, Hall Green) (Lab)
† Graham, Richard (Gloucester) (Con)
† Hopkins, Kris (Parliamentary Under-Secretary of State for Communities and Local Government)
Jackson, Mr Stewart (Peterborough) (Con)
† Jones, Susan Elan (Clwyd South) (Lab)
Jowell, Dame Tessa (Dulwich and West Norwood) (Lab)
† Kelly, Chris (Dudley South) (Con)
† Sawford, Andy (Corby) (Lab/Co-op)
Simpson, David (Upper Bann) (DUP)
† Smith, Henry (Crawley) (Con)
† Thornton, Mike (Eastleigh) (LD)
Wood, Mike (Batley and Spen) (Lab)
David Slater, Committee Clerk
† attended the Committee
Tenth Delegated Legislation Committee
Thursday 17 July 2014
[Sir Edward Leigh in the Chair]
Draft Local Government (Transparency) (Descriptions of Information) (England) Order 2014
11.30 am
The Parliamentary Under-Secretary of State for Communities and Local Government (Kris Hopkins): I beg to move,
That the Committee has considered the draft Local Government (Transparency) (Descriptions of Information) (England) Order 2014.
It is my first opportunity to serve under your chairmanship in my new role, Sir Edward. The order expands the descriptions of information about which the Secretary of State may require authorities to publish information more frequently than annually. On 1 May, under section 2 of the Local Government Planning and Land Act 1980, the Secretary of State issued a code of recommended practice on the publication of information by local authorities, called the local government transparency code 2014. It is the Government’s intention to make a legal requirement of local authorities to comply with part 2 of that code, and that should include a requirement to publish information on a quarterly basis about their spending and the contracts they enter into.
However, the Secretary of State may only require authorities to publish information on occasions recurring more than once a year if the information falls within the description of the information to which section 3(4) of the 1980 Act applies. Therefore, the order adds to the descriptions of information about which the Secretary of State may require authorities in England to publish information more than once a year—namely information about: any expenditure incurred by authorities, including expenditure exceeding £500 and Government procurement card transactions; and any legally enforceable agreement entered into by authorities and invitations to tender for such agreements.
I turn to the reasons for the code. The average band D council tax payer gives their local authority £122 a month. Hard-working taxpayers deserve excellent services that meet their needs—I have to say that the vast majority of councils provide that—and they have a right to know how their hard-earned money is spent and how their services are delivered. They also have a right to ensure that their council is getting the best deals to make every pound spent work just a little bit harder.
Taxpayers have a right to know what their council is doing. It is reasonable to expect councils to publish all the information they hold, unless there is a good reason not to, such as child protection or commercial sensitivities. Taxpayers should also be able to challenge councils in cases where they may be wasting money, acting as an incentive to councils to keep looking at how they
drive down costs. This is not just a whim; since we took office, we have reversed the central command and control of the last Administration and we have given unprecedented control to local councils and local people for the delivery of local services. The code is another step in that journey.Local people want their council to publish key information. The Bedford citizens panel survey showed that 64% of respondents thought it was very important that councils make data available to the public. Over half of the respondents said that they were most interested in seeing the data made available about council spend and their budgets. Research by Ipsos MORI has found that the more that citizens feel informed, the more they tend to be satisfied with public services and their local authorities.
However, councils’ performance on that is still patchy. Although some are embracing the importance of transparency and giving local people the information they want, others still have a long way to go and their performance has tailed off. The Local Government Association survey found that of the 113 respondents, only half published contract information in line with the then voluntary recommended transparency code. Earlier this year, the Press Association found that a number of local authorities were not publishing timely spending data at all. We have to get rid of all the waste that is out there in local authorities. Local authorities now need to make sure that they are accountable to those who matter most—local people.
In conclusion, the order is the culmination of over three years’ experience of local authorities implementing a recommended transparency code. During the recent consultation, nobody questioned the Government’s intention to require councils to publish quarterly data about their spending and the contracts they sign. Indeed, some respondents told us they were already doing that and, further, were publishing a monthly publication. Let me be clear: local people and local authorities say they want greater transparency, which brings benefits. Local authorities need to progress in publishing key basic data, which has been patchy. Greater transparency can help secure better public services and accountability, and increased economic growth. Respondents to the Government’s recent consultation did not question the quarterly publication of expenditure and contract information. We should listen to those messages. I commend the order to the Committee.
11.36 am
Andy Sawford (Corby) (Lab/Co-op): It is a pleasure to serve under your chairmanship, Sir Edward. You are, like me, a veteran of conversations over the past year about transparency and audit in local government. I welcome the Minister to his new role. I was not aware, until moments before the start of the sitting, that there had been a reshuffle in the DCLG team. I look forward to, I hope, continuing the constructive relationship that I had with his predecessor. We disagreed on many occasions but we always maintained a civil relationship and found the opportunity to make common cause in some respects.
One of those common causes has been around transparency and local government. I am a localist. The Labour party has broadly supported the changes to the
audit system, with some very significant reservations. We are moving into a new world of public audit for local authorities, in which the public will no longer be able to see, through the work of the Audit Commission, how effectively a local authority spends its money and whether they are getting value for money. We regret the loss of that element of the role of the Audit Commission and we would have looked to enhance the role of, for example, the National Audit Office or, indeed, the consortium of local authorities that are going to come together to provide audit, to offer that, benchmarking the ability for the public to see whether their council is providing value for money. Things have been lost.Looking at the order, our question is: how effectively does the schema of publication of expenditure over £500 fill that gap and enable the public to really see what is happening in their local authority and to understand what the value for money is? We urge the Government to undertake a serious review of the experience of recent years and, in particular, to ask the public what their experience has been of the ability to see what transaction has taken place in local authorities and what the different areas of expenditure are, how effectively they have been able to challenge the local authority in a constructive way, and what change has resulted from the scrutiny that they have been able to bring to bear through seeing those transactions. That would have been a helpful staging point before developing the quite prescriptive order.
There are other inconsistencies in the Government’s approach. The Minister tells us that it is important that local authorities should publish the information, yet, Sir Edward, as you will know from the extensive debates that we had about the demise of the Nene Valley News and other council publications, the Government have made it much more difficult for local authorities to communicate with their public, especially those who are not readily online, where the Government tell us much of that information will be available. A lot of people want to access information through traditional means and the publication of data about local authority spending was a common feature of many of those council publications around the country that now, regrettably, no longer exist. Of course, where those publications were inappropriate, overly political or overly expensive, they needed to be looked at, at a local authority level, but the prescription by central Government is something we regret.
The other inconsistencies concern some of the thresholds in the order. The code requires details of all invitations to tender that are worth more than £5,000. You will know, Sir Edward, through your experience of the Public Accounts Committee and public audit at central Government level, that that is out of line with the central Government requirement of £10,000. Why do the Government think it is appropriate to set a different threshold for local authorities from that for central Government? Consistency would have been welcome, certainly in terms of the relationship that, I hope, can evolve in the future between local government and central Government—much more of a parity of esteem. We would look to have some equivalence in the thresholds. Will the Minister explain why the requirement was set at £5,000 and not £10,000?
The code requires publication of details of all contracts or commissioned activity. Again, that is not in line with the Government-wide procurement practice of publishing
details of contracts for more than £10,000. Many authorities already do that on regional portals, but the code, by having a lower threshold of £5,000, requires authorities to duplicate that information: once for the code, and once for the portals that have the higher threshold, in line with central Government. Will the Minister comment on why the threshold has been set at a different level? That does not make obvious sense. If there is a case for a £5,000 threshold, perhaps that should apply to central Government as well, but it seems that £10,000 might be more reasonable and in line with the current approach to the portals. I will be interested to hear his explanation. We would support not one threshold or the other, but a sensible and coherent argument for the most appropriate threshold in the interests of transparency that looks at the level and kinds of transactions that take place at both levels of government.On Government procurement card transactions, such cards are used primarily by central Government and much less by local government, so the need for this requirement, as distinct from general expenditure over £500, is unclear. For those in local government who do use GPCs, their statements may not include the description of goods and services; in which case, that information would have to be entered manually by local authorities, which would add a burden to the publishing of that information. What thought has the Minister given to that additional burden? He talks about efficiency in local government and I am sure that he would not want to burden it additionally without thinking through why that is necessary. There is again inconsistency between the way in which local and central Government are being treated.
On grants to voluntary, community and social enterprise organisations, the Minister will be aware that there are no settled legal definitions for these organisations. We have made inquiries and cannot find clear legal definitions, so if the Minister is drawing on Acts of Parliament or some other generally recognised legal definition of what constitutes such organisations, it would be helpful if he would share those sources to allow us and local authorities to interpret this measure. Indeed, if the public want to challenge how local authorities are interpreting that, it would be helpful for them to check the definition put on the record by the Minister today.
The lack of settled definitions makes comparisons between authorities difficult and means that they will not be able to tell whether they are complying with the code or not. That might lead legal advisers to local authorities to adopt a precautionary approach that could lead to too burdensome an interpretation of the code’s requirements, with local authorities reporting extensively on transactions with small local organisations that the Government may not have intended to capture.
In recent years, local authorities have worked effectively to publish spending information and open up their data to local communities and business, who in turn are creating products and services that are having positive effects in their communities. Local government as a model is becoming more diverse and developing a much more diverse set of relationships across the public sector and with local enterprise partnerships. Has the Minister considered how transactions carried out by local enterprise partnerships, or indeed combined authorities, will be captured by the order? Where are the types of authorities to which the order relates set out? That does appear
clear from the primary legislation. A good starting point would be to understand where those LEP transactions would appear.Local government is also developing an increasingly complex set of relationships with the private sector, which again are not captured effectively in the order to allow the public to see those transactions. I ask the Minister to look again at the strong arguments made by hon. Members during the passage of the Local Audit and Accountability Act 2014 for freedom of information to extend properly to private sector contractors in respect of audit and the transparency of the transactions that take place in those relationships.
Michael Fabricant (Lichfield) (Con): I was following the hon. Gentleman’s argument with interest, particularly with regard to LEPs, but then he moved on to the private sector. While I totally agree about the need for transparency, does he fear, as I do, that he might be putting an additional burden on to private companies, which might damage their trading ability?
Andy Sawford: The hon. Gentleman makes a very important point, which is to recognise the burdens that the order places upon those who are subject to it. We have argued that the Government should think very carefully about the burdens they are placing on local authorities who are captured by this legislation, and on the relationships between local authorities and the voluntary community and social enterprise organisations, albeit ill-defined within the order. That burden should be proportionate, in the interests of transparency, but of course it should be consistently proportionate and transparent in connection with the relationship with the private sector.
We would not wish to see an unfair burden placed upon, for example, small and medium-sized enterprises that contract in my own area with local authorities—especially Labour councils, who are much, much better at procuring for social value. All the evidence shows that Labour local authorities around the country are really leading the way now in procuring for social value through local SMEs. We would not want to see an unfair burden placed upon that relationship in terms of the transparency and reporting. But we do want to see some transparency in how public money is spent, of course.
I would ask the Minister to think about that relationship with the private sector. This could be captured by the extension of freedom of information legislation. We did have some indications, during the passage of the Local Audit and Accountability Act 2014, that the Government would take this away and look at it. I did understand that there was consideration to look for an alternative legislative vehicle for that, and I should be really grateful if the Minister would give us an update.
Richard Graham: The hon. Gentleman made a rather curious statement just then—that Labour-run councils were much better at creating social value. May I give him a small illustration of diametrically the opposite? Gloucester city council, when it was run by the Labour group in collaboration with the Liberal Democrats,
managed to sell Westgate car park for £1. They then bought it back a few years later for £1 million. What sort of social value do you think that generated?The Chair: Order. This is very interesting, but the word transparency leaps to mind, so if in answering that point the shadow Minister could stick to his brief, I would be very grateful.
Andy Sawford: I am guided by you, Sir Edward, and I will not be tempted down the road of commenting on a very specific local issue, which I do not know the detail of. All I can say in response to the hon. Gentleman is that I was citing figures compiled from freedom of information responses that show that 30% of procurement by Labour local authorities is now procured for social value from local business, in comparison to 20% by Conservative councils. I am sure that there are some outliers in respect of both parties, but I am proud that there is generally a really good track record now of Labour local authorities procuring for social value. But of course there must be transparency in that procurement and in those transactions.
We will not seek to divide the Committee on this issue, but I hope that the Minister will be able to respond to that range of points, and especially to the point about consistency around the thresholds, which leaps out at us as being something that local government will view as inexplicable and perhaps unfair.
11.48 am
Kris Hopkins: I thank the hon. Member for Corby for his comments and I look forward to a very constructive relationship with him. He is right that on quite a few occasions we probably will not agree, but we should be respectful and decent to each other and I am sure that we shall have some robust and sensible conversations in future.
The hon. Gentleman raised the issue of figures and transparency, and the £500 figure. I think a lot of people out there are sceptical of councils. I will be honest, as a former council leader: I do not think they should be. I think there are some extremely dedicated and professional individuals there. But if the publication of this information gives the public some confidence around this issue, I think we should support the order—we should do this.
My experience is that there is limited information out there for the public, and they see large councils, particularly, as impenetrable organisations which they sometimes feel disconnected from. An opportunity to articulate the spend and the contractual arrangements between businesses and organisations is extremely important.
The question was asked, why £5,000 as opposed to £10,000? I confess I did not know about the £10,000 threshold for central Government. I do know that in council areas small and medium-sized businesses will have more access and more ability to connect with that smaller contractual agreement of around £5,000 than maybe a central Government contract of £10,000. So, rather than excluding some businesses by not providing information on contracts worth less than £10,000, we think the right thing to do is to publish the information where contracts exist and enable people to see what kind of business, what kind of trade and what opportunities
there are for businesses in those local communities to apply for future contracts and opportunities to grow their businesses.Andy Sawford: I broadly agree with the Minister’s point. I welcome his acknowledgment that in supporting the £5,000 threshold in this order, the £10,000 threshold was not in his mind; rather he was thinking about what was most appropriate at a local level. I can see where the Minister is coming from, and it relates to the point about social value. I would urge him though, given his remarks, and given the stated strategy of the Cabinet Office to increase procurement for social value, and for central Government to procure from SMEs, to take the opportunity, perhaps through Cabinet Sub-Committees or elsewhere, to make representations to his colleagues across central Government about that £10,000 threshold.
Kris Hopkins: I will confess that over the past 24 hours this £5,000/£10,000 debate has been burdening me. I will go out and explore with the Cabinet Office the issue that the hon. Gentleman raises about the £10,000. He raised an important point around transparency and communications. My experience at local level was that my local media were never shy to explore published data. The more information we can get out there, the better; we have a free press and we have a challenging opportunity. Opposition councillors were very robust in their challenge. Scrutiny committees also play an important part in that challenge. The information placed before them gives them that opportunity to challenge council leaders and portfolio holders and the officers of the council.
The issue around burdens on councils is an important debate. We went out and asked local authorities how much they estimated this further burden on them would cost and they came back with a figure of around £4 million. We would seek to compensate them for that, to ensure that they have moneys available to address that liability.
On definitions of voluntary and community groups, we went to the London Government Association and spoke to umbrella organisations in the sector to get that definition. We will not be prescriptive about who should apply in each different locality. Different businesses and voluntary groups will want to participate. The fact that we have published the information means they can see the opportunities their individual organisations have to grow their sector, organisation or business.
Andy Sawford: It was representations from the LGA to me that led me to raise such a serious issue. It is concerned about the lack of definition. Secondly, given
my shorter experience of dealing with legislation—I have served on several Public Bill Committees—the precise meaning of language, including where one is seeking to define types or classes of organisation, can be very important. We should expect a clearer definition behind this, rather than say it is up to local authorities. Otherwise, it is rendered less meaningful for the public’s guarantee or assurance of transparency, if it is entirely down to local authorities to interpret terms that ought to be clearer in the context of the order.Kris Hopkins: My understanding is that the definition of voluntary and community groups was agreed with the LGA and umbrella organisations. That is where I stand on this. I have listened to what the hon. Gentleman said. I want to have a really constructive relationship with the LGA and I have had an extremely successful relationship with voluntary organisations in the past. I want to go and have that conversation with the LGA to get some reassurance.
Andy Sawford: I thank the Minister for that reassurance. Will he please write to me with that definition? That would be very helpful.
Kris Hopkins: By all means. I will also write to him on LEPs and the funding that they receive, because I would also like some clarity on how that is established. Between the Government and the LEPs, the growth deals have a clear contractual arrangement on delivery and that will be transparent. Where councils will be involved in that process is something to explore further.
On private sector businesses and FOIs, I take the point made by my hon. Friend the Member for Lichfield. I do not want to put greater burdens on private businesses. Where public money is being spent by local authorities, there should, and will be, openness on the council side about which private business has received that money.
Finally, I want to touch on consultations. The Government, engaging with the LGA, held three consultations and three workshops, which 63 authorities attended to discuss our proposals. Next year, we will review the order that we are seeking to put in place. I hope that the Committee will support it.