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May 7th, 2012
Modern government could be interpreted as a device for projecting corporate power. Since the 1980s, in Britain, the US and other nations, the primary mission of governments has been to grant their sponsors in the private sector ever greater access to public money and public life.
There are several means by which they do so: the privatisation and outsourcing of public services, the stuffing of public committees with corporate executives(1), the reshaping of laws and regulations to favour big business. In the UK, the Health and Social Care Act extends the corporate domain in ways unimaginable even five years ago.
With these increasing powers come diminishing obligations. Through repeated cycles of deregulation, governments release big business from its duty of care towards both people and the planet. While citizens are subject to ever more control – as the state extends surveillance and restricts our freedom to protest and assemble(2,3) – companies are subject to ever less.
In this column I will make a proposal which sounds, at first, monstrous, but which I hope to persuade you is both reasonable and necessary: that freedom of information laws should be extended to the private sector.
The very idea of a corporation is made possible only by a blurring of the distinction between private and public. Limited liability socialises the risks which would otherwise be carried by a company’s owners and directors, exempting them from the costs of the debts they incur or the disasters they cause. The bail-outs introduced us to an extreme form of this exemption: men like Fred Goodwin and Matt Ridley are left in peace to count their money while everyone else must pay for their mistakes(4).
So I am asking only for the exercise of that long-standing Conservative maxim: no rights without responsibilities. If you benefit from limited liability, the public should be permitted to scrutinise your business.
Companies already have certain obligations towards transparency, such as the publication of financial statements and annual reports. But these tell us only a little of what we need to know. In News International’s annual report, you will find none of the information disclosed at the Leveson Inquiry, though it is of pressing public interest. In fact it is only due to a combination of the Guardian’s persistance and pure chance (the discovery that Milly Dowler’s phone had been hacked) that we know anything about the wide-ranging assault on democracy engineered by that company.
Privatisation and outsourcing ensure that private business is, or should be, everyone’s business. Private companies now provide services we are in no position to refuse, yet, unlike the state bodies they replace, they are not subject to the freedom of information act. The results can be catastrophic for public accounts.
Just as the Blair government did while imposing the disastrous private finance initiative(5,6), the Bullingdon boys now shield their schemes from public scrutiny behind the corporate information wall. Companies are once again striking remarkable deals, hatched in secret, at the expense of taxpayers, pupils and patients. Last week, for example, we learnt that Circle Healthcare will be able to extract millions of pounds a year from a public hospital, Hinchinbrooke, which is in deep financial trouble(7). Crucial information about the deal remains secret on the grounds of Circle’s “commercial confidentiality”(8).
The principle of corporate transparency has already been established in English law. The Freedom of Information Act has a clause enabling the government to extend it to companies with public contracts(9). Unsurprisingly, it has not been exercised. The environmental information rules of 2004 define a public authority as any body providing public services, which includes corporations(10). Why should this not apply universally?
The Campaign for Freedom of Information points out that the Scottish government almost adopted this idea: it proposed extending the transparency laws to major government contractors(11). But though this plan was overwhelmingly popular, it was dropped last year on the grounds that the contractors were opposed to it(12). (Who would have guessed?). South Africa, by contrast, provides a general right of access to the records of private bodies(13). The African National Congress, aware of how corporations assisted apartheid, recognises that the state is not the only threat to democracy.
Freedom of information is never absolute, nor should it be. Companies should retain the right, as they do in South Africa, to protect material that that is of genuine commercial confidentiality; though they should not be allowed to use that as an excuse to withhold everything that might embarrass them. The information commissioner should decide where the line falls, just as he does for public bodies today.
The purpose of this monstrous proposal is not just to shine a light into the rattling cupboards of private companies, but also to change the way in which they behave. A body which acts as if the world is watching presents less of a threat to the public interest than a body which knows it won’t get caught. Would News International have acted as it did if its emails could have been revealed as a matter of course rather than as a matter of chance? If it is true that “governments don’t rule the world, Goldman Sachs rules the world”(14), should we not be entitled to know what Goldman Sachs is up to? Is that not the only means we have of preventing its unelected power from becoming tyrannical?
I realise that is is not a good time to be making this request: far from extending our transparency laws, Cameron hints that he wants to roll them back(15,16). But unless we decide what we want and how we mean to obtain it – however remote it might now seem – we have no means of making social progress. If we are to reclaim power from the corporations which have seized it, first we need to know what that power looks like.
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