My Lords, I thank the noble Lord, Lord McNally, for securing this important debate. I fear that my words will very much echo his and I feel sorry for the Minister that he has so far had so little support. As we have heard, freedom of information requests are an essential safeguard in our system of government. They give the public the tools to hold the Government to account over the decisions they take and the way taxpayers’ money is spent. The Freedom of Information Act 2000 covers central government departments and the executive agencies and public bodies they sponsor. They typically receive around 8,000 to 9,000 freedom of information requests every quarter. That has risen from about 7,000 per quarter in 2010. The percentage of freedom of information requests that departments refuse to comply with in full has increased from around 40% in 2010 to 55% by the end of 2018.
As well as this, the Act covers Parliament, the Armed Forces, devolved Administrations, local authorities, the NHS, schools, universities and police forces. However, since the legislation was introduced, there has been an explosion of private-sector involvement in public functions. This has been driven by this Government’s ideological pursuit of privatisation and outsourcing. But companies which enter into such contracts are not subject to FOI requests and subsequently not subject to similar levels of accountability as others working in the public sector. The Information Commissioner's Office, which is tasked with the special monitoring of FOIs, said,
“The lines between public and private sector service delivery have blurred as local authorities enter joint ventures with private companies and some start to trade on for-profit and not-for-profit bases. However, this growing area of quasi-commercial activity is removed from public scrutiny offered by the FOIA”.
I am particularly concerned that large companies can achieve a quasi-monopoly position and end up bidding for contracts at a lower market value when they are up for renewal. The Public Accounts Committee found that between January 2016 and July 2018 government departments had to renegotiate over £120 million worth of contracts with the private sector to ensure public service delivery would continue because they were initially contracted out too cheaply. I believe this is slowly destroying the public sector and stops smaller companies being able to enter the market. With competitors squashed, costs are forced down and inferior labour conditions are introduced. Profits subsequently rise and, instead of being reinvested in public services, they fill the pockets of those running such companies and their owners. As the Freedom of Information Act 2000 does not cover such outsourcing and private/public sector contracts, I am unable to discover to what extent this is happening.
I am losing track of the number of failures of outsourcing which have come to light in the past few years. These have thrust the question of whether private companies should provide public services into the spotlight. We all know how the catastrophic collapse of Carillion highlighted the problems with the outsourcing business model. Its collapse in January 2018 directly impacted on 30 councils and 220 schools. But the list of failures does not stop there. In May the Government were forced to announce a U-turn to reverse their 2014 part-privatisation of probation, and in April they said that they would take HMP Birmingham permanently back into public ownership from G4S after appalling violence and an inspection report last August.
A similar experience can be found at the local level. Bedfordshire County Council’s contract with HBS for financial services, human resources and other services was ended early after major dissatisfaction with services. Barnet council had to pay thousands of pounds for emergency IT services after its regular provider went into administration.
I also highlight the failings of Capita and its botched recruitment contract with the Army. Recruitment is in free fall, with numbers standing at 75,880—well below the Government’s target of 82,000. Can the Minister explain why the Government continue to sign new contracts with companies—for example, the recent £525 million MoD contract which will privatise large parts of its fire and rescue service to Capita—despite these companies having failed to simply do their job? To put it simply: outsourcing as it stands is a broken business model.
Following these failures, the public have rightly lost confidence in the privatisation of our public services and the carve-up of the public realm for private profit. They are keen for outsourcers to be subject to the same law as the rest of government. However, current loopholes in the Freedom of Information Act, as well as in the Human Rights Act, are hindering any efforts to do so, and the Information Commissioner, Elizabeth Denham, has called for FoI laws to be extended to all public service suppliers. This would force companies running public services to answer to the public. Does the Minister agree that introducing more accountability can help restore some trust? Can the Minister confirm that the Government will follow the ICO’s advice and extend FoI requests to all public service suppliers?
Last Saturday, Labour announced that we would transform the legislative framework around outsourcing contacts by making them subject to the Human Rights Act and the FoI Act. We would legislate to ensure that local authorities review all service contracts when they expire and to create a presumption that service contracts will be brought back in-house and delivered by the public sector unless certain conditions and exemptions are met. We would also introduce a new set of minimum standards in contracts where outsourcing has to continue, including a fair wage clause, trade union recognition, supporting local labour and supply chains, annual gender pay audits and time-limited contracts. Will the Government be making a similar commitment? These changes will help bring accountability and public responsibility, as well as fairer working conditions, to a failed model which has been protected by this Government for too long.
It is clear that outsourcing and contracting out public functions to the private sector cannot continue without reform. The constant failures coming from major outsourcing firms cannot be allowed to continue. It is time to give the same tools to the public to hold private companies to similar standards as government departments when carrying out important public functions. Extending FoI requests is a key part of that but, overall, we also need to move away from an ideological desire to privatise first and ask questions later. However, I believe that will come only from a change of government.