Dilemma for private bosses as Labour unveils transparency plan for public service work

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An end to the corporate backhander? [Picture: This Is Money}

A Labour government would make private companies who provide services at the taxpayers’ expense obey public sector transparency rules, it has been revealed.

The change means firms and charities that sell services to the state – for example, all the private companies now working in the NHS – would lose their right to commercial confidentiality.

The Freedom of Information Act would be extended to cover them and they would have to reveal their commercial secrets if a FoI request required them to do so.

If enacted, this is likely to be more effective in creating transparency of lobbying than the Parliamentary Bill of the same name that is currently working its way through Westminster.

The policy was revealed in a Sunday Times article which is paywall protected. Labour has yet to release an announcement on its website.

The article quotes shadow justice secretary Sadiq Khan, who said: “More and more of our public services are being delivered by private companies and charities, out of reach of freedom of information. We must demand the same openness from them as we expect from government. It’s not on to let these organisations hide behind a veil of secrecy.”

Bravo.

The new policy comes after a 10-minute rule motion by Labour’s Grahame Morris began its journey through Parliament earlier this month. Such motions rarely get very far because the government of the day usually opposes them in the later stages and there is often too little time to complete the debate.

But these bills stimulate publicity for their cause, and it seems clear that the Labour leadership has taken this particular cause on board.

So it should – concerns are high that unfair advantages are being handed to, for example, the private healthcare companies, who are then able to hide the facts behind the veil of commercial confidentiality. Why should they be allowed to do this when they are providing a public service, funded by the citizens of the UK?

Existing NHS operators do not have the advantage of commercial confidentiality and must provide details of the way they operate if a FoI request is submitted to them. This makes them vulnerable during the bidding process for NHS contracts, as private operators can ask about the current providers’ operations and then undercut them to get the work.

Then there’s the so-called “revolving doors” practice, in which government advisors move to lucrative contracts in the private sector, often after providing advice that changes government policy in favour of their new employer. Mr Morris’s motion noted that “at least five former advisors to the Prime Minister and the Chancellor of the Exchequer are now working for lobbying firms with private healthcare clients”.

This is a corrupt practice – the firms gain an unfair advantage because they have, if you like, a spy in government manipulating affairs to their advantage. Nothing is done about this at the moment, nor will the Labour proposal change that situation – but we will all be able to see who the spies are.

It would probably be advisable for a future Labour government to put powers in place to reverse any change in the law due to corrupt advice intended to engineer a commercial advantage to a private company. Restricting the movement of government employees to other jobs would be problematic, but if it is known that any changes they effect will be reversed after such a move, then the exercise would become pointless.

Companies would not be able to pay a person to influence the government while they remained in the taxpayers’ employ, as this would be a clear case of bribery and corruption.

A previous VP article on this subject mentioned the idea of the level playing field – and Labour is to be praised for producing policies intended to restore that principle to government in the face of Conservative and Liberal Democrat efforts to skew the field in favour of their corporate chums.

And the corporates themselves? Well, their bosses are likely to be furious and it’s possible that all kinds of threats will come in Labour’s direction.

That’s fine. A Labour government can take any such complaint in stride by launching a programme to revise government tax strategy with regard to corporates, and bring any complaining company to the top of the list.