Government departments often hide behind commercial confidentiality clauses to block transparency, the chair of an influential Commons spending watchdog has claimed.

Speaking yesterday evening at the launch of the CBI's Public Services Network, Ms Hodge, chair of the Commons Public Accounts Committee (PAC) cited the Department for Work and Pension's flagship Work Programme as a case where officials refuse to release performance data.

Introduced by Channel4 news reporter Cathy Newman as a ‘rockstar of tax avoidance', Ms Hodge said her Committee's experience in scrutinising the big four Government contractors disproved the perception that major suppliers were unwilling to co-operate with auditors in divulging their commercial standards.

‘It's often the case that Government hides behind commercial in confidence. The Work Programme is an example of where the public sector doesn't want to release the data,' she said.

But Ms Hodge also castigated telecommunications giant BT for resisting to be open about the £1.2bn awarded for rolling out high-speed broadband to sparsely populated rural areas.

‘The role of the PAC is to follow the taxpayers pound,' Ms Hodge said.  ‘I am agnostic about who providers are, as long as they do it in the public interest.'

She said around half of the public sector's estimated £200bn annual spend on goods and services - out of a total annual public expenditure of around £700bn – was channelled to third party, mainly private sector providers.

Although the public sector required the skills and expertise only private sector suppliers could deliver, the public sector is different because of democratic accountability.

‘The context of operating in the public space is you [suppliers] need to develop high ethical standards,' Ms Hodge added.

‘If you enter the public sector arena, you must recognise this difference,' she added.

She urged open book accountability as key to ensuring transparency in a fragmented public sector landscape, and said recognition of Freedom of Information (FOI) provisions should form a ‘hugely important' part of suppliers bidding and contracting.

But she reserved judgement on the ability of Government to effectively manage its supply base.

‘Whitehall has to improve contracts, it is hopeless in setting terms and conditions, monitoring performance and using sanctions properly,' she said.

CBI general director John Cridland earlier extolled the growth and development of a public services industry in the UK over the last 30 years as a national success story.

Mr Cridland said it would become ever more vital for the country's firms to export their skills around to emerging economies around the world, as growing public demand and expectations is likely to see public procurement spend triple in key parts of the developing world over the next two decades.

He concluded that public confidence would be underpinned through allowing genuine competition that could challenge incumbents and allow new entrants into the market, greater accountability and ‘open book' transparency.