“Transparency International’s report ‘Corruption in Local Government: The Mounting Risks’ warns that an unintended consequence of changes such as the Localism Act and those proposed in the Local Audit and Accountability Bill may be to create an enabling environment for corruption.
The report notes that experts hold widely different views about the scale and prevalence of corruption in local government, but there was general consensus that recent changes would increase the risk of corruption happening in future.
It identifies sixteen recent legislative changes which increase the risks, as well as other trends such as the decline in scrutiny by local press and the move to more private sector out-sourcing. This report includes twenty-two recommendations, including that the Government should conduct a corruption risk assessment and strengthen whistleblowing procedures.
We’ve mentioned before the excellent work of Transparency International, an organisation that campaigns throughout the world for more transparency and less corruption in public and political life, covering everything from vote-rigging to military procurement corruption.
In a new report, they turn their attention to the UK local government, which is responsible for around a quarter of all UK public sector spend, and purely in terms of “procurement” spend accounts for something around £50 Billion a year. In their new report, Corruption in UK Local Government: The Mounting Risk they highlight what they see as an increasing danger of corruption in that sector, with procurement and procurement related risks high on their list. Indeed, of their 12 key risk areas, six are procurement related:
“We identify twelve key risk areas:
1. public procurement at needs assessment stage;
2. public procurement at bid design stage;
3. public procurement at award stage;
4. public procurement at contract implementation stage;
5. control and accountability over outsourced services;
6. the revolving door of personnel between local authorities and private companies bidding to provide services;
7. planning discretion and influence regarding ‘permissions to build’ decisions;
8. planning discretion and influence regarding ‘changes of use’ decisions;
9. failure to enforce section 106 agreements;
10. the conflict of interest where councils make planning decisions about property they own;
11. collusion in housing fraud or deliberately ineffective monitoring of housing fraud; and
12. manipulation of electoral registration”
They also identify a number of reasons why we should increasingly worry, including a decline in scrutiny from the Audit Commission and local press (either gone out of business or pretty supine), more outsourcing and legislative changes. There is less independent auditing, and growing “networks of cronyism” as they put it. The abolition of the Audit Commission for example will save £250M over 5 years, but how much will it cost in corruption or indeed incompetence that goes unchallenged?
Legislation has also removed some of the protection that was afforded to whistle blowers. There is a hope that some of this scrutiny will be replaced by “armchair auditors” as politicians like to call them, but as Transparency International point out, “the public does not by and large have the interest or capacity to monitor the conduct of local government to the depth necessary to hinder or detect fraud and corruption. Moreover, even if the public detects suspicious conduct, it does not have the investigative capacity to probe whether standards or rules have really been violated or any institution to which it can turn to make a formal objection or allegation…”
The “localism” drive is well-intentioned but again could have unintended consequences. For example , in the procurement arena, awarding contracts to a firm because they’re local rather than best VFM might become more acceptable. Then we find that the firm happens to be owned by the council leader’s brother in law…!
There is a scary case study in the report where a firm wins a contract to run a leisure institution, then itself awards contracts to a business owned by the councillor with responsibility for leisure! And of course freedom of information does not apply to the main contractor, so we can’t know whether their decision to give the councillor the work was objectively determined. So it basically stinks.
There is little doubt that there is less corruption in local government than there was 30 or 40 years ago. But it would be remarkably easy for things to start moving in the wrong direction, as readers of Private Eye will know well (Cotswold Water Park, anyone?) So this is a timely report, (which you can download here), procurement people need to be continuously vigilant, and we’re always happy here to do our little bit if we can help to expose anything dodgy in our sphere of influence!”