The Labour Party has called for Freedom of Information (FoI) rules to be extended to cover public sector contracts, including auditors.

Shadow justice secretary Sadiq Khan said Labour plans to make companies with local government contracts more accountable by bringing them under the jurisdiction of FoI.

‘FoI could save the taxpayer money if alleged wrongdoings are uncovered at an early stage or prevented altogether,' he said.

His calls echo those made by shadow communities secretary, Hilary Benn, last month, for private auditors to be covered by the FoI Act after the Audit Commission is scrapped in 2015.

‘The Audit Commission is covered by the FoI Act, but generally speaking, private auditors are not, so transparency, which the secretary of state repeatedly tells us he supports, will be diminished.'

The chief executive of the Association for Public Service Excellence, Paul O'Brien, commented: ‘I think it would cause people involved in negotiating those types of contracts to think more carefully because it would identify very clearly that there would be openness and transparency.

‘We're supportive of the idea of FoI being widened to cover these types of arrangements because we're talking about vast sums of public money.'

In the wake of the recent scandal at Lancashire CC, a local Unite representative, Les Parker, said authorities need to learn from what has happened.

Mr Parker said: ‘People need to look at the procedures of how contracts are let per se.‘I think the issue of transparency and accountability has to be addressed.

‘Everyone is hiding behind commercial confidentiality but everyone should be able to find out what a local authority is doing and ask questions.

‘Transparency is absolutely the top priority. I think that all local authorities should be looking at the probity aspects of this. I think there has to be public accountability.'

The council is investigating payments of more than £600,000 it made to a BT executive.