Grant funding transparency

In November last year the Public Accounts Committee published a highly critical report on the government’s funding of Kids Company. Noting how Kids Company was treated as a special case and that funding decisions did not follow due process (something I’ve previously written about), the committee made five recommendations.

The government has now responded to the report, accepting these recommendations in full and setting out the steps it is taking. Of particular interest are the plans, already underway, to develop what is being called the Government Grants Information System (GGIS).

The intention is that within 12-18 months this will become a comprehensive register which enables ‘the recording and reporting of grant information across government in a simple, standardised and scalable way’. It is hoped that this will improve transparency, provide insight into government spend and reduce the risk of fraud.

A register that works

We wholeheartedly endorse this plan which addresses a long-standing government failure. It shouldn’t have taken a grant-giving fiasco on the scale of Kids Company to convince The Cabinet Office or The Treasury of the value of being able to know who the government grant funds and how much they get.

To make the most of this opportunity though, two issues must be addressed. Firstly, it is not explicit in the government’s response whether this will apply to all grants, or just those received by the voluntary sector.

We calculate that only around 5% of government grants and subsidies go to charities. A register which failed to include the far greater grants sums going to private sector would not be worth the paper/database/Excel spreadsheet/stone tablet it was stored on.

Secondly, the government has not detailed how public the GGIS will be. This could range from refusing to publish it on the basis of commercial sensitivity (though this would inevitably be challenged via freedom of information appeals) through to putting the live register and analytical tools online, with full public access. The closer they can get to the latter the better. The long-promised ‘army of armchair auditors’ will find their jobs much easier if open data is provided in a consistent and high quality format.

And contracts?

We also shouldn’t stop at grants. The same arguments for improving transparency, enabling more effective market stewardship and reducing the risk of fraud apply equally to contracts.

What’s more, there is already a partial register of contracts in place: Contracts Finder. All central government contracts worth over £10,000 and local government contracts over £25,000 should be advertised on the site. When a contract is awarded, the details are meant to be published as a notice.

There are two major issues preventing this from being a usable database of government contracts. Firstly, the information provided on contract award notices is patchy. The four key bits of information – commissioning body, contractor, contract value and contract length – are not always all given.

Secondly, contractor details are not published in a consistent way. Ideally, each should be given a unique public identifier (such as company number and/or charity number) so that aggregate figures can be easily compiled (this should also be done on the GGIS). It is now almost a year since the new Contracts Finder beta service was launched but still no progress has been made on these crucial issues.

Fixing Contracts Finder, while necessary, would not be sufficient for providing a full picture of government contract recipients. This is because increasingly government funding is awarded to prime contractors which then sub-contract much of the work to other organisations, often from the voluntary sector. Contracts Finder can only currently provide information about prime contracts.

To understand the role of sub-contractors we need the implementation of a standardised transparency clause. Last year we worked with the Institute for Government and others to develop proposals for such a clause. This would require publication of information on:

• which organisations are delivering  front line services
• what funding is being passed down the supply chain to enable them to do so
• the role played by supply chain members in good or bad performance against key indicators.

Although the principle of greater transparency was accepted by the then minister Francis Maude, progress has since stalled. Hopefully the development of the GGIS is a sign that this government has finally woken up to the importance of greater open data on statutory spending.