Ministers are “failing to act” on the lessons from the Post Office scandal by refusing to change laws around public contracts, union leaders have said.

The TUC said the Procurement Act, passed last October, was a “huge missed opportunity” to tighten up rules governing the awarding of taxpayer-funded contracts to private companies.

The legislation was designed to allow the UK to shape its own procurement rules post-Brexit, including new regulations to help in emergency situations and more opportunities for small businesses to win contracts.

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But the TUC accused the government of leaving “huge gaps” in the oversight of such contracts, and “blocking attempts to properly safeguard workers from mistreatment”.

It said that when the bill was debated in parliament, unions, Labour and the Liberal Democrats had all called for it to ensure that private companies delivering a public contract were subject to Freedom of Information requests.

Such a provision would have helped uncover the scale of the problem with the Horizon software far earlier, the TUC said, but it was not included in the legislation.

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Ministers were also accused of ignoring calls for there to be independent oversight of publicly awarded contracts, in the form of a statutory body with a specific mandate to assess value for taxpayers’ money.

Unions also campaigned for a “public interest” test to be applied when public services were outsourced, and a clause to enable workers to seek compensation if they were mistreated during the delivery of a public contract.

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The TUC, highlighting other scandals like the collapse of construction firm Carillion, said the widespread outsourcing of public contracts had led to a “race to the bottom” on quality along with workforce pay and conditions.

TUC general secretary Paul Nowak said: “The Post Office/Horizon debacle must never be allowed to happen again, but the government has failed to act on the lessons from this scandal despite repeated calls and warnings.

“Last October’s Procurement Act was a chance to improve the oversight and delivery of publicly awarded contracts.

“Yet instead of putting in place the necessary checks and balances, ministers blocked attempts to properly safeguard workers from mistreatment.”

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He added: “Huge sums of taxpayers’ money are still being awarded to private companies without proper accountability and transparency.

“Ministers must call time on failed outsourcing. Public services should be run in the public interest, not for profit.”

The Horizon scandal saw more than 700 sub-postmasters and sub-postmistresses handed criminal convictions after faulty accounting software developed by Japanese firm Fujitsu made it appear as though money was missing at their branches.

Victims have described being shunned by their communities, financially ruined and having their families destroyed. Some went to jail and the scandal has been linked to at least four suicides.

The issue has come under renewed scrutiny following the airing of the ITV drama Mr Bates vs The Post Office, which documented the postmasters’ 20-year fight for justice.

Politicians have come under pressure to act, with Rishi Sunak announcing on Wednesday a new law to “swiftly exonerate and compensate” victims who were wrongly convicted.

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Fujitsu ‘entrenched in central government’

While the proposals were widely welcomed, the prime minister is facing increasing calls to go further and bar Fujitsu from securing government contracts and pursue the firm for the payments.

It has emerged that since 2012, Fujitsu has been awarded £6.8bn in public sector contracts, including an extension last year to the Horizon deal.

Earlier this week, Conservative Peer Lord Maude told parliament that during his time as cabinet office minister in 2010, it had been “impossible” to prevent Fujitsu getting more official work despite its “woeful” performance, and that it was “deeply entrenched across the whole of central government.”

Justice Secretary Alex Chalk has already said the Japanese company should stand ready to reimburse around £1bn due to be paid out to victims if the inquiry into the scandal finds the “scale of the incompetence is as we might imagine”.

A government spokesperson said they would not pre-empt the findings of the inquiry but “once the full facts are established, we will consider all options to hold those responsible to account – both legally and financially”.

In defence of the bill, they added: “This report fails to acknowledge that the Procurement Act has strengthened accountability of suppliers and the government’s power to challenge and exclude them, and is embedding transparency through the whole commercial process. This includes setting up a new, dedicated Procurement Review Unit, which will monitor contracting authorities’ compliance.

“The government closely manages its relationships with strategic suppliers, on a cross-government basis, by constantly monitoring their performance – and we stand ready to use our new powers when appropriate.”

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